Property price growth in Singapore slows as cooling measures kick in
Measures announced in Singapore at the end of August to cool the property market are starting to have an effect in terms of slowing property prices.
But prices are still rising as the latest figures from the Urban Redevelopment Authority (URA) showed private home prices rose by 3.1% in the third quarter of the year to push its index to a high of 190.
But the price increases are slowing, down from a 5.3% increase in the second quarter of the year. While in the public housing sector the Housing and Development Board (HDB) said prices of HDB resale flats increased 4%%, the sixth quarterly gain in a row.
Analysts said that the slowdown in the pace of price increase for private homes occurred despite the URA flash estimate being based on the first 10 weeks of the quarter and therefore did not capture the full impact of the cooling measures.
According to agents sales are down by between 10 and 20% as both buyers and sellers retreated to the sidelines to assess the implications of the Government’s announcements.
Experts believe that the fourth quarter of 2010 will be a better gauge of the impact of the cooling measures and they already expect the rise in private home prices to drop below 3%.
‘Without the policy, we estimated that possibly we would close the year at maybe 16 or possibly 18% higher. But now with the policy, we are likely to rein in growth to a more sustainable level of 2 to 3% on quarter growth, so we should see the full year coming in at about 15 to 16%,’ said Chua Yang Liang, head of research for South east Asia at Jones Lang LaSalle.
In the public housing market, resale transactions volume last month declined by about 25% compared to August, according to the HDB.
The latest cooling measures announced in August, the third set in 12 months, mean that buyers of non-subsidised HDB flats are not allowed to concurrently own an HDB flat and a private home within the minimum occupation period that has been increased to five years.
Buyers with more than one mortgage can only borrow up to 70% of a property’s value, compared with 80% previously, and must pay 10% in cash, up from 5%.
Also a seller’s stamp duty will also be payable if the property is sold within three years of purchase, up from one year.
Some commentators believe that transaction volumes could trend lower in the coming months despite an increase in viewing as there could be a lag in the full impact from the new rules.
‘Although there is an increase in the viewing rate, it does not mean that there is an increase in transactions. The last two weeks, we have seen that a lot of developers have not been advertising aggressively, because a lot of buyers out there and even investors have this wait and see approach,’ said Eric Cheng, chief executive officer of ECG Property.
Agents said that on average, the turnaround time between a viewing and a sale is taking twice as long with some buyers holding out hoping for better prices. A sale on the primary market usually takes about two weeks, while a sale on the secondary market can take more than a month.
Industry players said mass market homes have been the hardest hit from the new rules with prices for that sector falling by up to 10% in September. ‘We have seen a few properties selling below the normal market value, but by and large, most prices are holding steady and in fact my prediction is that in a short time prices should continue to increase again,’ said Patrick Liew, chief executive officer of HSR International Realtors.
HSR is predicting that property prices will stay flat for the next six months before starting to climb moderately by about 5% next year. Others like ECG are more pessimistic and believe prices could drop by 10% before bottoming out