Since 1985, the government has reversed its property policy stance in 1997, 2001 and 2008, when price declines were between 8.3% and 16.4%, according to OCBC. Significant economic stress were also anticipated in these times. Currently, prices are down 6.9% from the recent peak.
In October 1997, the government introduced Deferred Payment Scheme (DPS) after prices dipped 16.4%. DPS allows purchasers to defer 80% of the progress payments to a later date. Later in August 2001, the government restricted HDB flat supply to below 8,000 units after prices dropped 12.7%. In July 2008, the government once again intervened by suspending confirmed Government Land Sales (GLS) list.
Given its straight-forward impact on demand, Additional Buyers’ Stamp Duty (ABSD) is a possible measure to be adjusted when policy reversal happens. In addition, Government may restrict land supply via GLS.
“The remaining measures are more structural in nature, and are more likely to cause derivative impact on the banking system and developer moral hazard.” the report added.