Are Property Cooling Measures In Singapore Working Their Magic?

An article that Blomberg Business published earlier today had caught my eye. It reported that many property agents in Singapore have been turning to driving for Uber Technologies Inc. to make a living.

According to the Bloomberg Business piece, private new homes sold in Singapore by developers have fallen drastically since peaking in 2012, in which close to 22,000 transactions were recorded. In 2015, less than 8,000 private new homes were sold by developers, the lowest since 2009.

The government had implemented the first round of property cooling measures in Singapore in 2009 and since then, there have been a series of additional measures, such as the additional buyer’s stamp duty (ABSD) and tighter Loan-to-Value limits for both lenders and property buyers.

It seems that the cooling measures have been very effective in slowing down the property market in Singapore. In looking at publicly-listed property developers that are predominately operating in Singapore, we can see a sharp drop in revenue for some of them over the past few years.

For instance, Ho Bee Land Limited (SGX: H13) had seen its revenue decline from S$468.9 million in 2012 to just S$101.3 million in 2014. Its operating profit had also shrunk dramatically from S$144 million to just S$54.6 million over the same period.

Foolish Summary

It seems that the property cooling measures that have been introduced by the government are working their magic.

But, given the slowing economic growth in Asia, which is led by China, and the possibility of higher interest rates in the future following the U.S. Federal Reserve’s first rate hike last December since 2006, could the government possibly consider lifting some of the cooling measures? Only time will tell.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.