The resale market continued its downward trend as sales of previously-owned private homes last month slumped to their lowest level in more than five years, a further indication of the impact the cooling measures have had in dampening demand.
Flash estimates by the Singapore Real Estate Exchange (SRX) yesterday put the overall resale volume of non-landed private homes at 242 units last month, down 18.5 per cent from January and 22.2 per cent from a year earlier.
The data, which shows the lowest monthly resale volume since December 2008, illustrates the impact of cooling measures, analysts told TODAY.
They added that resale prices, which dipped after two consecutive months of growth, will see a further correction this year, although the decline will be marginal.
The weak demand is a continuation of the market trend last year, when resale volume dropped by 50 per cent, said PropNex CEO Mohamed Ismail. “More sellers are not motivated to dispose of their properties, as the cooling measures mean some of them will not be able to buy properties after they sell because of the stringent restrictions,” he said.
Sellers are also unwilling to budge on pricing, noted OrangeTee’s Head of Research Christine Li.
“Sellers will look at developers’ recent land bids — which were bullish — and think that the current price level is sustainable,” she said. “So they are not in a rush to sell or cut prices, creating a mismatch of expectations between sellers and buyers, whose appetites may be capped by the total debt servicing ratio and the additional buyer’s stamp duty.”
The SRX data also showed overall resale prices declined 2 per cent last month, following a gain of 1.1 per cent in December and 1.9 per cent in January.
The biggest price drop last month was in the core central region at 3.9 per cent, while prices in the rest of the central region rose 0.4 per cent.
Against this backdrop, analysts said they expect resale prices to dip marginally this year. “In 2013, despite all the government measures, we still had a positive growth of 1.1 per cent in resale prices. This year, at best, we will see a marginal correction of 5 per cent,” Mr Ismail said. Ms Li said she expects a 2 to 5 per cent softening in the new and resale markets.
And with close to 100,000 units of new private homes expected to be released over the next three to four years, based on Urban Redevelopment Authority data, “supply will be greater than demand and buyers will have more choices and stronger bargaining powers”, said SLP International’s Executive Director of Research, Mr Nicholas Mak.
“That means sellers will be more willing to negotiate prices going forward”.
Source : Today – 11 Mar 2014