IMPACT OF ANTI-SPECULATION MEASURES INTRODUCED ON 14 MAY 1996 ON THE PRIVATE PROPERTY MARKET

Abstract

This study examines the implications and impact of the anti-speculation curbs recently introduced by the government of Singapore on 14 May 1996. Although a number of factors contribute to the upward property trend, it is observed that the trend starts to deviate from the country's GDP growth pattern from 1992 onwards. This indicates the possibility of speculation in the local property market. An attempt is made by the author to identify the existence of speculation in the local condominium sector by tracking the number of classified advertisements of selected condominium developments after their launch. The findings indicate that there is indeed speculation activities in this sector. Thus, the government of Singapore has decided to resolve the issue of speculation by the introduction of a sweeping package of anti-speculation measures in mid-May this year. These curbs include measures to discourage speculation through the levy of stamp duty, taxing of gains at the income tax rate and tightening credit, especially for foreign purchasers. The impact of such measures is studied with respect to a few selected condominium developments launched before and after the May curbs. The study showed that the curbs have achieved their intended effects of decreasing speculative activities and stabilizing private property prices. However, the effects of the measures would be more accurately reflected in the third and fourth quarter of1996 and as such, a study should be done on the long-term impact of the curbs in discouraging speculation and cooling market fervour. The desired long-term outcome should be a steady growth Private property prices which is in tandem with the country's GDP growth.