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The government is taking action to curb the exuberance, in midst of the residential property market still reviving after a four-year slump

Home prices forecast to climb as much as 10% this year could remain flat in 2019 and may decline as much as 3%, show estimates from property brokers compiled by Bloomberg News. Home sales that lagged behind 2017 levels this year may once again be below that mark in 2019, according to forecasts.

“The market has come to a standstill,” stated Lee Nai Jia, Knight Frank’s head of research in Singapore. “The government is unlikely to introduce additional curbs or rollbacks as the market is stabilizing.”

The pace of residential property price increases is slowing after the government added measures to cool the market in July. Those curbs were prompted after prices rose about 7% in the first six months of the year, fueled by aggressive land bids from developers and en-bloc or redevelopment transactions.

Additional guidelines that limit the number of “shoe-box sized” apartments developers can build, plus anti-money laundering safeguards that restrict builders, are further constrictions. The government stated earlier this month that it plans to slow its release of land sales for residential use in the first half of 2019, citing a spike in supply and cooling in demand.

Authorities’ constant tweaking of rules and taxes surrounding the property market is a worry for home builders, Smartkarma analyst Tan Kok Keong stated. It could increase developers’ costs and reduce the island’s appeal for international players.

However, the government maintains that is needs to intervene and prevent a property bubble. Private home prices may have risen as much as 15% this year had the authorities not taken action, according to a speech by Lawrence Wong, the National Development Minister.

“Let me be very clear that the government cannot and will not take a hands-off attitude to the property cycle,” Mr Wong said. “So there should not be any surprise when we intervene in the market, because that is our approach and attitude.”

The Monetary Authority of Singapore stated in its annual financial stability review in November that sharp property-price increases, if left unchecked, could have run ahead of economic fundamentals and raised the risk of a destabilising correction later.

“Had the government not introduced the additional curbs, this bull run in the residential market would have continued for three years,” said Nicholas Mak, an executive director at real estate asset manager ZACD Group. He expects prices to remain flat in 2019 in a best case scenario, but said declines of up to 3% could occur.

Aggressive land bids from developers are also expected to drop in 2019. En-bloc sales have totaled $10.8 bn from 37 transactions so far this year, according to CBRE Group Inc. That’s expected to decline to about one-tenth of that in 2019, said Desmond Sim, CBRE’s head of research for Singapore.

“Given the sizable supply pipeline from public land tenders and private collective sale sites accumulated before the curbs, developers are likely to be more cautious,” stated Tricia Song, head of research for Singapore at Colliers International Group Inc.

They “may pace out their launches to ensure the market remains sustainable in the coming year”.

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