Status quo on tax treatment for property sellers. The government will retain the current income tax framework pertaining to property sellers, which means it will consider the facts and circumstances (including reason of sale, holding period of property and frequency of property sales) of each individual disposal to determine if the disposal gains would be taxed. The earlier proposed change had stipulated that profit from a property sale (on or after 1 Jan 10) would be exempted from tax if the seller has sold only one property within a four-year period.
Supply-oriented measures becoming more likely. This reaffirms our view that a supply-oriented measure now appears more likely than a demand-oriented one, which should only be implemented when speculation is excessive and not when the economy and property sector have just started to recover. The figure above shows some of the expected launching projects.While this should put to rest fears of any near-term anti-speculative measures, we believe the government is continuing its tight watch over the current property market buoyancy, with excessive speculation and mass projects’ affordability as their top concerns.
Although we admit that speculation may have surfaced in some cases within the mass-mid segment space, the fact that profile of buyers here continues to be dominated by locals and relatively more price-sensitive HDB upgraders (implying genuine owner-occupiers) suggests that any speculation is not over-the-top. As for affordability concerns, we hold the view that continued strong demand for mass projects, as well as recent intense bidding for the Chestnut Avenue GLS site, expected similar response for two other ongoing bids and more triggers could increase current asking prices projects within the mass segment. As such, this could induce the government to either reinstate the Confirmed List at earlier-than-expected dates or tweak public housing application criteria.
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