SINGAPORE - The Singapore government's latest measures to cool the residential property market may cause the economy to slip into a recession, the Real Estate Developers' Association of Singapore (REDAS) said.
"Industry players are of the consensus view that the measures will, at least in the short term, negatively impact property sales volume and price," REDAS President Wong Heang Fine said in a message to members issued late on Tuesday.
Quoting an unnamed analyst, Wong said the measures could tip the economy, already on the edge, into a recession.
"With real estate activities accounting for some 5.2 per cent of GDP, a 25 per cent fall in property transactions in 2012 could shave GDP growth by about 1.3 (percentage points)," he said.
Singapore this month introduced new measures requiring buyers who are not Singapore citizens or permanent residents to pay an additional 10 per cent stamp duty when they buy residential property, on top of the existing 1-3 per cent in stamp duties.
Developers would also have to pay an additional stamp duty if they failed to complete selling all the units in a residential project within five years of acquiring a site.
Foreign buyers accounted for 19 per cent of all private residential property purchases in the second half of 2011, up from 7 per cent in in the first six months of 2009, according to government data.
Wong, who heads the Singapore residential business of Southeast Asia's biggest developer CapitaLand, said the latest government measures shocked developers, given the slowing global economy that had already affected the trade-dependent city-state.
Singapore said last month its economy could contract in the current quarter and growth next year is likely to slow to 1-3 per cent due to the weakness in Western economies.