PRIVATE PROPERTY PRICES CONTINUE TO MODERATE

Despite the property market still not feeling the full impact of the latest cooling measure, flash estimates showed prices of private homes were almost flat - rising by just 0.2 per cent - between October and December last year.

In a press release yesterday, the Urban Redevelopment Authority noted: "The rate of increase in private residential property prices has continued to moderate for the ninth consecutive quarter". The 0.2-per-cent increase in the fourth quarter was in contrast to a 1.3-per-cent rise in the previous quarter.

With buyers adopting a wait-and-see attitude, property analysts Today spoke to pointed out that the estimates do not reflect the impact of the recent cooling measure, which has been described as the harshest yet.

Which is why some of them felt that prices of private homes could fall - for the first time since 2009 - in the coming months.

An increased supply of private homes, coupled with the impact of the cooling measure, could see private home prices fall by about 3 per cent in the year ahead, said Propnex CEO Mohamed Ismail.

However, Orange Tee director of research and consultancy Tan Kok Keong told Today that he expects prices to fall by between 1 and 2 per cent at most between January and March.

On Dec 7, the Government announced additional buyer's stamp duties (ABSD) which will be imposed in addition to the existing tax. Foreigners and corporations will be hardest hit, with a 10-per-cent ABSD imposed on any private homes they buy.

While the indications are that private home prices are stabilising, analysts noted that the fourth quarter is the traditional lull period for the property market.

According to the URA, its flash estimates are compiled "based on transaction prices given in caveats lodged during the first 10 weeks of the quarter supplemented by information on the number of new units sold by developers".

The statistics will be updated next month, when more data on the caveats lodged and the take-up of new projects are captured.

The URA said: "Past data has shown that the difference between the quarterly price changes indicated by the flash estimate and the actual price changes could be significant when the change is small. The public is advised to interpret the flash estimates with caution."

SLP International research head Nicholas Mak said the revised figure would likely vary by between 0.1 and 0.2 per cent.
He said: "But if the final figures are low, it's hard to tell if it is a direct impact from the ABSD. There are other factors such as the euro zone crisis and the Singapore economy."

He added: "The ABSD alone will not cause prices to drop, as it does not eliminate demand. Singaporeans and permanent residents, who are not so affected by the new measure, will sustain demand and hence prices."

Concurring, Chesterton Suntec International research and consultancy head Colin Tan said buyers should not hold their breath for prices to drop.

He said: "So long as we have slow growth or at least positive growth, so long as employment holds up, I think we do not expect prices to correct anytime soon."

Source: Today - 4 January 2012

Demand for mass market homes 'to be stable'

BUYERS may be reeling from the tough property measures announced earlier this month but analysts do not expect this to last long.

They say in a report that demand for mass market homes will be unaffected although prices could fall 5per cent to 10 per cent.
The report stressed that the measures are largely targeted at foreign buyers, a group that is not prominent in the mass market property segment.

Data from the Urban Redevelopment Authority shows that locals dominate the private home purchases in the suburbs where mass market homes are located.

Singaporeans accounted for 69.9 per cent of caveats lodged for homes outside the central region, while foreigners took up a 14.4 per cent share.

Foreigners were more active in the city centre and city fringe districts, accounting for 28.7 per cent and 20.2 per cent of the caveats lodged in those areas.

The report also suggested that the various property measures introduced since September 2009 have failed to dampen new home sales. It added that the market has been supported by mass market and upgrader-type homes.
The measures were introduced to counter the excessive inflows of foreign liquidity.

The new measures are unlikely to be permanent due to the nature of Singapore's open economy. Still, foreigners who had been thinking of buying a home here are probably having second thoughts in the light of the added stamp duty.

Under the new measures, foreign buyers will have to pay an extra 10 per cent on top of the existing buyer's stamp duty of about 3 per cent.

The impact would be felt the most in prime and luxury residential properties with prices expected to fall between 10per cent and 15 per cent next year. Mass market homes could fall by 5 to 10 per cent. Separately, landed home prices will likely see a smaller correction of less than 5 per cent, since foreigners are generally not allowed to buy and supply is limited.

Some developers of properties in the prime districts are already trying to woo buyers back to the market by offering discounts.
Agents marketing the Verv at River Valley said the developer is shaving 10 per cent off the prices of its remaining apartments. A 1,010 sq ft apartment now costs $2.25 million.

At Loft at Nathan, another River Valley project, a 1,980 sq ft penthouse that would previously cost about $1.8 million now costs about $1.7 million.

Both projects are not new launches. The Straits Times understands that the two offers were made in response to the recent measures.

Developers are definitely watching the market now. They will probably re-assess the sector again towards the end of January, and perhaps we might see more offers then.

Source: The Straits Times – 19 December 2011