Another round of Govt property cooling measures?

Analysts say surge in private home sales reinforce the case for harsher measures

A surprising surge in private home sales last month – coming at a time when the Government’s cooling measures were expected to take effect – has prompted analysts to predict that another round of intervention could be on the cards.

Private home sales in November jumped almost 80 per cent from the previous month, bringing the total number of homes sold so far this year to more than 15,000, surpassing the 2007 record of about 14,800 units.

According to data released yesterday by the Urban Redevelopment Authority (URA), 1,909 private residential units, excluding executive condominiums, were sold last month, up from 1,058 units in October.

Lakefront Residences in Jurong was the most popular property, selling 437 units at $1,075 per square foot (psf) last month.

The most expensive residential unit, priced at $4,358 psf, was sold at Scotts Square, a Wheelock Properties’ project on Scotts Road, while the cheapest sale was at Waterview, a Sim Lian project at Tampines Avenue, for $501 psf.

The surge in sales caught analysts off-guard as it comes just three-and-a-half months after the Government took steps on Aug 30 to cool the property market, including asking banks to demand more upfront cash from homebuyers with existing mortgages.

Said Colliers International director of research and advisory Tay Huey Ying: “It just goes to show that a lot of investors are still viewing property as a safe place to park their wealth in spite of the high exposure to policy risks.”

Ms Tay noted that another “driving factor” could be foreign purchases that were “diverted from the HDB resale market” as well as from Hong Kong and China, which introduced property curbs in recent months.

The suburban market led the pack in November, with 1,229 units sold outside the prime central region; the core central region, by comparison, saw just 213 transactions, with the remaining 467 units getting sold in the rest of the central region.

Analysts said that buyers are rushing to take advantage of low interest rates amid concerns about overleveraging.

In the latest annual Financial Stability Review, MAS said that while “household balance sheets continue to be strong, supported by conducive economic conditions” household credit exposures “need to be closely monitored and the risks appropriately managed”.

According to URA, 2,329 units were launched last month. Industry watchers expect between 800 and 1,300 units to be sold this month as developers will likely launch fewer properties during Christmas and New Year.

Industry watchers say yesterday’s figures have buttressed the case for another, harsher set of cooling measures, such as a tax on profits from property sales, in the next few months.

Chesterton Suntec International head of research and consultancy Colin Tan said: “What’s going to happen if the buying doesn’t stop? While we may not feel the impact now, the consequences may come a year or two later, and they can be pretty adverse.”

Source : Today – 16 Dec 2010

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