The number of resale non-landed private homes transacted in February was the lowest in more than five years.
This is according to latest numbers from the Singapore Real Estate Exchange (SRX).
The data also showed that resale prices fell by 2 per cent from January.
Property consultants said that they expect the resale market for private homes to remain fairly muted amid current cooling measures.
Two hundred and forty-two resale non-landed private homes changed hands in February.
This is down by 22.2 per cent from a year ago, and the lowest monthly sales number since December 2008.
When compared to January 2014, when 287 units were transacted, the drop was 18.5 per cent.
It is also the fourth consecutive month of decline, hurt by property cooling measures which are currently in place.
Colin Tan, director and head of research & consultancy at Suntec Real Estate Consultants, said: “In a normal year, you would expect some resale due to upgrading, but what happens is that a lot of these upgraders, or potential upgraders, are staying put.
“(This is) partly because of cooling measures, which require upgraders to pay the stamp duty first, and then after they sell the existing unit, to claim it back. It is burdensome and they have to come up with cash resources which could be used for, let’s say, renovation. Sales will continue to be weak, but this is not sustainable.”
The SRX numbers showed that overall prices have also declined, dropping by 2 per cent month-on-month, led by homes in the city area.
According to the SRX Property Resale Index, prices of homes in the city dropped 3.9 per cent, followed by suburban home prices, which decreased 1.8 per cent. City fringe homes, however, saw resale prices climbing by 0.4 per cent.
The last time the Resale Index for the Core Central Region fell more than 3.9 per cent was in March 2012, when it fell by 4.7 per cent after the introduction of the first Additional Buyer’s Stamp Duty cooling measure on 8 December 2011.
Mr Tan said: “They are freehold and they appeal more to foreigners, and since the Additional Buyer’s Stamp Duty has been imposed, the market has softened slightly.
“The local market also doesn’t help because these units are fairly big, 2,000 square foot and above. Even though dollar per square foot comes down, it is still quite a substantial amount, maybe 2-3 million. So that is really beyond affordability for most locals.”
Property consultancy OrangeTee said prices could fall by up to 5 per cent for 2014, and that the resale market will remain soft amid current cooling measures.
Christine Li, head of research & consultancy at OrangeTee, said: “The current housing policies still favour new home sales, especially in a weakening rental market. A lot of investors will not consider buying a resale home because they have to compete with other landlords to get tenants, and the number of tenants are actually shrinking because of government policies on manpower.
“We think that investors will not come back to the resale market unless rentals show some drastic improvement in the coming years.”
In terms of rental prices, the SRX data showed that overall rental prices fell by 1.0 per cent in February, after a 1.2 per cent gain the previous month.
The largest decline of 1.9 per cent was for property in the city fringe area. This was followed by a 1.3 per cent decline in suburban areas. Rentals in the Core Central Region fell by 0.6 per cent.
Source : Channel NewsAsia – 10 Mar 2014