A smaller percentage of private home buyers - especially among foreigners who are not permanent residents - have turned to the subsale market to make their purchase this year, compared with the previous property bull-run in 2007.
These trends are attributable to an increase in the supply of new units launched by developers over the past two years as well as an overall slowdown in subsales activity following the introduction of steep seller's stamp duty rates in January to deter short-term trading of private homes.
Subsales are secondary market deals in projects that have yet to receive a Certificate of Statutory Completion (CSC) and are often seen as a gauge of the level of speculative activity in the market.
An analysis of URA Realis caveats data shows that of the total number of private homes bought by foreigners, the percentage that they pick up from the subsale market has fallen from 18-21 per cent in 2007-2009 to 13 per cent last year and 11 per cent in the first nine months of this year.
Foreign buyers occupy a higher percentage in the subsale market as usually, those who are here (mainly Singaporeans and PRs) have the first bite of the cherry when it comes to new property launches as they can easily attend the launches, view showflats and book their units. In the past, foreigners who missed out on these launches often had to turn to the subsale market.
Indeed market watchers note that in earlier property bull runs including the one in 2007, local buyers often punted on new property launches with the prospect of offloading their units to a foreigner in the subsale market at a handsome gain.
Things are different now. The government has acted strongly to discourage short-term property trades by imposing punitive seller's stamp duty rates of up to 16 per cent for those who have bought a private home on or after Jan 14, 2011 and sell it within a year. This has shrunk the pool of units available for sale in the subsale market.
There has also been a step-up in the volume of private residential properties launched in the past two years, on the back of increased state land sales.
Foreigners, especially from China, have also found it easier to clinch properties from Singapore developers these days. This is because of the aggressive marketing blitz by developers that includes offering potential buyers in China incentives to travel to Singapore to visit showflats.
PRs tend to rely on the resale market for a higher percentage of their private home purchases - possibly because many have been renting and are therefore looking for a completed home for immediate owner-occupation.
On the other hand, most Singaporeans already own a home and therefore can wait a few years for a private project to be completed. Investors - many of whom are Singaporeans and foreigners - can buy either completed or uncompleted units, which could explain the higher percentage of new sales among these two groups.
Foreigners are more inclined to turn to the primary market also because it's easier for them to view developers' showflats than to make appointments to view a completed property in the resale market, and to buy more than one unit in the same project from a developer, given the limited amount of time they have. Also, the overseas marketing of uncompleted projects has made them more accessible to foreigners.
Source: Business Times – 8 November 2011
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