Sweeping changes to property cooling measures to dampen sentiment

▪ ABSD rates were raised across the board by 5-15 pp (except first property purchases by citizens and PRs), while HDB loans’ LTV is down, from 90%, to 85%. 10 pp hike in ABSD (remittable) for developers to 35% would elevate development risks and temper land bids & en-bloc. In particular, tightening of TDSR, from 60%, to 55%, is expected to dampen affordability, especially for local upgrading demand, which has been driving the market thus far.

▪ Given the demand-supply imbalance, which has been driving the residential market, the extent of supply side measures would be key to watch on 16 December, when the government will announce supply
increases across both private and HDB to meet demand.

▪ Developer valuations (ex-CLI) have been ‘cheap’, at 0.58x P/B, c. 1 SD below 10-year average of 0.77x (historical: 0.98x), although there could be near-term downside relative to recent low of 0.46x. Subsequently, however, a key overhang has arguably been removed.