It's time for the Government to consider "thawing" property cooling measures, according to consultancy JLL yesterday.
The firm said in a report that one reason to reconsider the measures is the significant fall in property prices.
Overall prices of private homes have fallen by about 11.2 per cent since the third quarter of 2013, it said, citing Urban Redevelopment Authority data.
JLL said the luxury market has been most affected, with values declining by about 18 per cent from 2013, while those of mass market homes are down by 11 per cent.
Transaction volumes have also fallen. While last year recorded a three-year high in sales of 16,378 private homes, this still pales in comparison with the 22,197 homes sold in 2012, according to URA data.
"Property prices are now at one of the most affordable levels on record," said Dr Chua Yang Liang, JLL's head of research for South-east Asia, in a statement yesterday.
He said the price falls show that cooling measures such as the additional buyer's stamp duty (ABSD) and the total debt servicing ratio have worked. "Now could be the right time to consider measures that allow the residential market to resume a course for moderate growth and thus avoid a sharper correction down the line," he added.
STEER BUYERS TO LOCAL HOMES
A more active local residential market will better support domestic growth as it will encourage Singaporeans to invest in Singapore rather than overseas, where the risks are higher.
DR CHUA YANG LIANG, JLL's head of research for South-east Asia, on the need to resume a course for moderate growth.
The ABSD, introduced in 2011, imposes a 7 per cent to 10 per cent tax on Singaporeans buying their second and subsequent properties, and 15 per cent on foreigners.
Mr Chua said the ABSD is limiting demand as "buyers are holding back because they believe that the ABSD is temporary and will be withdrawn or changed".
He suggested replacing the duty with a longer-term property tax that would steer buyers towards evaluating their capital investment against long-term costs such as taxes and management fees.
The JLL report also noted that the cooling measures have prompted Singaporeans to invest in property in countries such as Malaysia, Australia and Britain.
JLL cited data from the Monetary Authority of Singapore, which said the value of overseas property purchases by Singaporeans reached a high of over $2 billion in 2013, although the value fell to $400 million in the first half of 2015.
"A more active local residential market will better support domestic growth as it will encourage Singaporeans to invest in Singapore rather than overseas, where the risks are higher," said Mr Chua.