The recent property-cooling measures are not likely to have a significant impact on the overall property market in Singapore.
Property experts speaking at an industry seminar on Thursday said global economic issues play a larger role, and that property prices will ride on positive economic growth.
The number of HDB resale transactions may have seen a sharp drop in the week immediately following the government’s cooling measures.
But experts said that overall, the recently-announced curbs will only have a marginal impact on the overall property market in Singapore.
They argued that external factors such as the state of the global economy play a more significant role.
“Generally the property price is affected by external factors, or the growth of the Singapore property prices is because of the improved economy. People’s income increases, their wealth increases, that’s why they are buying,” said Alfred Chia, CEO of SingCapital.
However, the measures are expected to reduce the cash premiums on HDB resale flats, commonly referred to as cash over valuation (COV), and they will put a damper on demand in the market for the rest of the year.
Market watchers expect COV amounts to decline by 10 per cent this year from current levels, with a further 10 per cent drop in 2011.
Sales in smaller properties are also seen picking up.
“For people with housing loan and on a tighter budget, they will have to lower their budget to buy another property. That means if originally they were looking at a $1million house, now they will have to look at something between $500,000 and $750,000, so you will see a shift in demand to smaller units,” said Chua Chor Hoon, head of Research (Southeast Asia) at DTZ.
While the market adjusts to the new measures, the volume of mass market property sold is expected to decline by 10 per cent from now until the year, according to some analysts’ estimates. No impact is expected in the high-end property market.
Experts may be forecasting a decline in property purchase demand in the HDB and private property market in the coming months, but in the longer term, good economic growth will continue to support Singapore’s property market.
Source : Channel NewsAsia – 16 Sep 2010