Property cooling measures could lead to unintended downward price spiral if not moderated: Redas chief

SINGAPORE - Singapore is on the declining limb of the property cycle, and looming supply is likely to bring home vacancy rate to a record high, said Redas president Augustine Tan on Friday.

He noted that vacancy rate at the end of last year is close to 8 per cent, or 24,000 units.

It is an increase of 54 per cent over the vacant stock in 1998 when the vacancy rate last peaked at 9 per cent.

However, total stock rose almost 80 per cent during the same period and is at almost 309,000 units.

"As we have seen in the past, we can go into an oversupply situation very quickly," said Mr Tan, who was speaking at the Redas Spring Festival lunch.

"As we move on, and we have a larger base of private properties - residential units, office and industrial stock, the boom and the bust, if anything, is going to be more damaging."

For homeowners, upcoming completion of 75,000 new private residential units from 2015 to 2019 will cause further slip in home rentals and "downward spiralling of property prices," he added.

Prices may have declined by 5 per cent from 2013 according to the Property Price Index, but actual prices in the luxury homes segment have dropped by at least 20 per cent, he said.

He also noted the downside of cooling measures, and said the imposition of the Additional Buyers' Stamp Duty in the high-end segment runs counter to the government's efforts to encourage foreign investment flows into the country, to grow investments and jobs here.

"Some high net worth foreign investors who create jobs for Singaporeans and have many choices of where they want to be from the world over, now feel they are not welcome in Singapore," he said.

Mr Tan called for a public-private sector collaborative effort in regulating the real estate market.

"The government, working on its own, may not be able to manage precisely the rate of decline in order to arrive at a level that is deemed to be desirable for a stable property market.

"They may have in mind a certain target but the measures, if not moderated, could lead to an unintended spiralling of prices by much more."