Singapore Property - Maybank Kim Eng 2017-03-10: Surprise Review of Property Cooling Measures

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Singapore Property Stocks Property Cooling Measures CITY DEVELOPMENTS LIMITED C09.SI WING TAI HLDGS LTD W05.SI UOL GROUP LIMITED U14.SI CAPITALAND LIMITED C31.SI HO BEE LAND LIMITED H13.SI

Singapore Property - Surprise Review of Property Cooling Measures

Potential positives from change in policy measures 

• We believe surprise changes to the property cooling measures have positive implications for Singapore’s residential market. 
• In particular, relief from changes to the Seller’s Stamp Duties could nudge the marginal buyer concerned with potential penalties to buy a new property. This could have positive impact on sales volumes and prices. 
• However, we believe the market should curb their enthusiasm as home buying demand will remain constrained by the ABSD, LTV and TDSR requirements. 
• At the margin, we see upside risks to our home sales volume and price assumptions. CDL and Wing Tai have the biggest exposure to Singapore’s residential market.

Surprise revision to property cooling measures 

• The Singapore Government announced a surprise revision to the property cooling measures. This is after an 11.3% decline in home prices since its peak in 3Q13. 
• The last round of tightening was the implementation of the Total Debt Servicing Ratio (TDSR) measure, which marked the top of the home price rally.

1. No change to Additional Buyer's Stamp Duties (ABSD) and Loan to Value (LTV) limits.
2. Implementation of Seller's Stamp Duties (SSD) is cut from 4 to 3 years with quantum lowered by 4ppt. See below for details.
3. TDSR framework will no longer apply to mortgage equity withdrawal loans with LTV ratios of 50% and below. Note that this is meant to allow homeowners to monetise their properties for cash. Usual TDSR requirements still apply for new home buyers.
4. Stamp Duties (Amendment) will be tabled to impose usual property stamp duties when equity interests in property-holding entities are transferred. Essentially, this closes the loophole used by developers to offload unsold stock in projects facing QC deadlines.

Knee jerk positives for CDL and Wing Tai 

• We see the change in SSD as a positive for the property market. Home buyers concerned about potential penalties if they have to liquidate properties after purchase could be swayed. This has potential positive implications on sales volumes and prices. 
• Nonetheless, any rebound in home buying demand will remain constrained by the ABSD, LTV and TDSR requirements. 
• For developers under coverage, CDL and Wing Tai have the biggest exposure to Singapore's residential market.

Derrick Heng CFA Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2017-03-10

Maybank Kim Eng SGX Stock Analyst Report HOLD Maintain HOLD 9.000 Same 9.000

HOLD Maintain HOLD 1.670 Same 1.670

BUY Maintain BUY 7.680 Same 7.680

HOLD Maintain HOLD 3.660 Same 3.660

HOLD Maintain HOLD 2.470 Same 2.470