Knee-jerk reaction? Not quite

When the most recent set of property cooling measures were announced in mid-January, many people expected a knee-jerk reaction even if a few felt the new rules were benign. Others feared the worst.

It has been more than two months since the measures came into effect and we have had more statistics to mull over.

The NUS recently released its February estimates. Prices for completed apartments recorded a marginal drop of 0.4 per cent but January’s performance was revised upwards from 2.6 per cent to 2.9 per cent, meaning that the second half of the month actually did better than the first.

Even the 0.4-per-cent drop in February was achieved after netting off the 1-per-cent rise in central from the 1.5-per-cent fall in non-central locations.

The decline in sales was also not sharp enough. It is not clear if it was seasonal or a direct result of the measures. These are all ambiguous signals – not quite the knee-jerk reaction but more like a quiet time for reflection.

More statistics will be released this afternoon. Hopefully, they will provide more clarity.

On hindsight, terms that were initially used to describe the cooling measures such as “overkill” or likening the measures to “using a sledgehammer to swat a fly” now seem overdone.

Nevertheless, while the market has proved resilient, it does not mean there has been no impact.

The effectiveness of a measure is dependent on how well it has met its objectives, while its impact includes other outcomes not intended as well.

While the market has not keeled over, it has certainly been bruised. There may be some internal haemorrhaging. If it does not heal, it tends to flare up in the most unexpected of times.

Many people say when trouble comes, it comes in waves and not singly.

With respect to the cooling measures, if it has not achieved its objectives by now, it never will. If the market were to be shaken now, it is most likely to due to other circumstances rather the measures themselves.

On a separate issue, many feel that the most useful proposal under the new rules to make timely and accurate information available to home seekers is the release of price lists two days before project launch.

You would expect such comments from investors, not so genuine home buyers for whom the rules are actually meant to protect. An investor would want to view the entire list to see which units give better value.

Unfortunately, pricing strategy is the marketers’ key weapon and rice bowl. You can be sure marketing agents will find a way around this rule.

What would be really useful to home buyers is the standard template that will state how much space areas like balconies, planter boxes and bay windows each occupy within the flat.

Buyers will now be able to do a like-for-like comparison only on areas important to them and assess which property is better for their needs

Let us not restrict this information to the first buyer but subsequent ones as well. It will be good if such data is carried in title deeds or official documents.

By Colin Tan – head of research and consultancy at Chesterton Suntec International

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