Real estate sales drop dramatically in Singapore following market cooling measures

Calming measures aimed at avoiding a real estate bubble in Singapore have had a dramatic effect with residential property sales falling 26% in November to their lowest level since January.

Figures from the Urban Redevelopment Authority shows that there were just 600 transactions recorded in November, the fourth consecutive monthly decline since a peak in sales in July.

Analysts say investors´ sentiments were dampened due to the Singapore government´s cooling measures in September followed by warnings from the Monetary Authority of Singapore (MAS) that a speculative bubble could form.
‘These are signs that mass market buyers are exercising greater caution,’ said Mohamed Ismail, chief executive officer of PropNex.
‘The mass market is cooling off to the government’s recent persuasive announcement,’ said Chua Yang Liang, head of research for Jones Lang LaSalle Southeast Asia.
November real estate sales were primarily driven by properties located in prime areas as developers had run out of mass market projects by the third quarter, forcing them to launch high end developments, the analysts point out.

According to CB Richard Ellis some 60.3% of properties sold in November comprised units in projects in prime areas. In comparison, only 38.2% of the 815 units sold in October were in projects from the prime areas.
'The higher number in November was mainly supply-led as 671 new homes were launched in the core central region compared to only 339 units being launched in October,’ said Li Hiaw Ho, executive director for CBRE.

The dominance of high-end properties was not surprising as the current property market favours only the cash rich, he added. Investors who entered the market were able to afford not only the initial down-payment, but also the progress payments plus the ability to absorb shocks in the market.
The MAS has warned that property owners could either suffer losses should economic growth prove to be weaker than expected or pay more for their monthly instalments should the economic recovery stay on course.

Analysts expect property sales in prime areas to maintain their momentum albeit with some caution. ‘The activity in the core central region is likely to maintain given the overall improvement in the regional economic conditions. We think the market is likely to remain cautious going forward into February 2010 where we may see a return of buying interest again,’ says Chua.
‘We expect the same levels of transaction in the first quarter of 2010,’ said Ismail.