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Hot opportunities in an even hotter market
May 21, 2012
PropertyGuru.com.sg : By Romesh Navaratnarajah: While many analysts see Singapore's property market as being too hot to handle, some have highlighted its potential, especially for long-term equity investors. Over the last three years, the government has introduced measures to cool the market. The most recent of which is the ABSD (additional buyer's stamp duty) on foreign buyers to curb investment demand. Meanwhile, data from the Urban Redevelopment Authority (URA) showed that private home prices moderated by 0.1 percent in Q1. Sub-sale transactions, an indication of speculative activity, also dropped significantly. In general, it appears that efforts to stabilise the property market are working, despite the on-going demand for housing. Low interest rates and high liquidity pushed sales to a near three-year high in April, which could result in more policy intervention. Daniel Martin, an economist at Capital Economics Asia, noted that the government faces a crucial test in bringing down prices over the coming year. "If prices don't start to cool in the next year, then we're going to be in a fairly dangerous situation where there's risk of a sharp fall," he said. "My sense is they'll go a little further and (require) more down payments on mortgages and standard capital requirements on banks — other macro-prudential measures that make it a little more difficult to buy a house." Kristy Fong, portfolio manager at Aberdeen Asset Management, said that while share prices have re-rated this year, the firm is "still happy, and positive on our stocks long-term, because property tends to be a reflection of the economy, and we're generally quite optimistic about the Asian region".