Property

Property: the govt announced the 4th set of cooling measures, wef today.
i) holding period for imposition of Seller’s Stamp Duty (SSD) raised from the current 3 yrs to 4 years; ii) SSD rates raised to 16%, 12%, 8% and 4% for units sold within the 1st, 2nd, 3rd and 4th yr fo purchase r’ptively; iii) loan-to-value (LTV) limit capped at 50% for buyers who are not individuals (i.e. corporates); iv) LTV lowered from 70% to 60% for individuals with one or more outstanding housing loans.

Industry players say this is the harshest set of measures so far. Transaction volumes are likely to see a significant slowdown, in conjunction with the seasonal lull associated with the Chinese New Year period.

The measures would also place a lid on property prices going forward. However declines in property prices though expected, may not be too excessive, in our view. The measures are aimed at reducing speculation, which has not been the main contributor to rising prices. The underlying drivers being cheap interest rates, liquidity, and foreign interest are still present.

Expect an initial knee-jerk reaction, as the mkt sells off residential developers at the open. However we note that most property counters have not run up that much prior to this, given the overhang of policy risk. Hence we do not rule out a possibility of a rebound once the selling pressure passes.
Watch for the banks, which may suffer from collateral damage due to the expected decline in loan growth.