Limited immediate impact of Govt’s cooling measures

Transactions likely to have been inflated by buyers ‘rushing to complete purchases before the measures took effect’

The first collated property sales data for January suggests the latest round of cooling measures introduced last month may have had limited immediate impact, but analysts are cautioning it is still far too early to draw any firm conclusions about how the market is reacting.

According to the Singapore Real Estate Exchange’s (SRX) flash report for January, 920 private residential flats were resold in the month, a sharp 16.7-per-cent increase from the number sold in December.

But Mr Lee Sze Teck, Senior Manager for Training, Research and Consultancy at DWG, said the number of transactions was likely to have been significantly inflated by buyers rushing to complete purchases before the cooling measures took effect: “In January, there will have been a lot of last-minute deals signed so that people could avoid having to pay the Additional Buyer’s Stamp Duty (ABSD).”

The ABSD was one of the measures announced by the Government on Jan 11 to take some of the heat out of the property market. Other measures included tighter loan-to-value limits and higher minimum cash downpayments for second and subsequent housing loans.

The measures appear to have had limited impact so far on the resale prices of non-landed private homes, as they inched up 0.6 per cent in January from the previous month, according to the SRX report, which compiles data from 11 property agencies.

There was some variation within the overall pricing result, though. Resale prices of non-landed private homes in the city fringes rose 2.5 per cent to an average of S$1,256 per square foot (psf) last month from December, while the mass market segment rose 1.1 per cent to S$997psf.

In contrast, resale prices in the core central region saw a drop of 2.9 per cent to $1,878psf.

In the HDB sector, the median resale price dipped by just 0.7 cent between December and last month to S$457,000. However, the decline reverses the upward trend seen between October and December, during which the median price increased 1.6 per cent.

Mr Eugene Lim, Key Executive Officer at ERA, noted that more BTO (Build-to-Order) launches, along with the cooling measures, will help stabilise HDB resale prices: “With a higher success rate of attaining their perfect home in the new flat launches, buyers could turn away from the resale market.”

Median Cash Over Valuations (COVs) increased by S$1,000 last month to S$34,000, staying firmly within the S$33,000-S$35,000 range that has been in place since October last year, the SRX report noted.

Still, COVs could start to take a dip going forward, said Mr Lee, with a potential fall of up to 10 per cent this year. This is because of the cap on the Mortgage Service Ratio (MSR), which means people will have to reassess the amount of cash they have to set aside to pay for the property.

Source : Today – 9 Feb 2013

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