Over the last few days, many home buyers and sellers in Singapore moved to cancel their property deals or re-calculate their outlays for holding investment properties, after the government introduced another round of property cooling measures late last week.

According to market observers, some developers have started to cut prices, and offer discounts on a case-by-case basis in a effort to stop buyers from walking away from planned purchases; one developer is reportedly offering a group of investors a discount of 5%, and another offering to absorb the buyer’s Stamp Duty.

Under the new property cooling measures, the 4th in 2 yrs, the holding period for Seller’s Stamp Duty (SSD) will be increased from 3 to 4 yrs.

In addition, the SSD rates will go up to 16%, 12%, 8% and 4% for residential properties sold in the 1st, 2nd, 3rd and 4th year of purchase respectively. And the Loan-to-Value (LTV) limit will be lowered to 50% for housing loans to purchasers who are not individuals and 60% to individuals with 1 or more housing loans. All measures were effective on January 14, 2011.

Donald Chua, the property sector analyst of CIMB Research Private Limited, believed that with a total of 1,699 private home units sold in December last year, marking the best December sales in 3 yrs, and took Y 2010 sales way surpassing previous highs in Y’s 2007 and 2009, the local property market may have appeared still too “Hot” for the government to be comfortable with.

Many analysts agree that the latest cooling measures are harsh, and their impacts could be felt immediately and lasted for a while.

Liew Mun Leong, who is the CEO of CapitaLand, one of the biggest listed developers in Singapore and the region, expects private home prices and sales volume to fall following the latest round of property measures, but on the bright side, he thinks the measures will make it easier for the group to win land parcels in government tenders.

CIMB Research’s Chua also predicted that latest measures could compel potential investors and speculators to think twice before finalizing investments, thereby affecting transaction volumes in the near term. Coupled with news of buyers forfeiting their deposits and relinquishing options to purchase some properties, sales in January and particularly February will be the Key numbers to watch.

That cautious view on the impacts of latest government measures is also shared by Lock Mun Yee, the property analyst of DBS Group Research. With the latest round of cooling measures in place, he now expects home prices in Singapore to move only between 0-3 percent this year, and projects primary home sales volume to be lower at 10,000 units throughout the year.

As for whether government will introduce more cooling measures going forward, analysts widely agrees that a lot will depend on the home sales data released in coming few months. CIMB Research’s Chua said, “With the government warning of further intervention if property prices keep spiraling, we believe that policy risks have yet to peak for developers.”

A Nomura Singapore’s analyst warned, “Going forward, should the latest measures fail to cool the market, we believe there is potential for more cooling measures ahead, including Holding Period Tax, which is also part of anti-speculation measures introduced in Y 1996 to impose tax on gains from property sales within 3 yrs of purchase.” —Paul A. Ebeling, Jnr. www.livetradingnews.com