Property buying sentiment holding up despite cooling measures

In the immediate aftermath of the announcement of the Government’s most sweeping property cooling measures to date, property stocks plummeted as analysts said the impact on demand could be severe with a possible double-digit drop in sales of private residential units.

But as the panic gradually settles, a snapshot of the market suggests that buyer sentiment may still be on the positive side, and the immediate dampening effect may be less than forecast.

One project that does not seem to have been unduly affected is Q Bay Residences, in Tampines. The first condo to be launched after the cooling measures were announced on Jan 11, 312 of the 510 units launched there had been sold as of Jan 21, according to joint developer Fraser and Neave.

Q Bay’s success so far is partly the result of an aggressive marketing campaign, said Mr Alan Cheong, Senior Director of Research and Consultancy at Savills, but at the same it also points to stronger positive sentiment than had been expected.

“The ones that have been worried are the ones in the industry, and they are frightening themselves more than they need to,” he said. “I haven’t heard that buyers are withdrawing from the market because of the measures. Instead they are still asking, ‘Is it time to buy now?’. This suggests sentiment is still positive.”

At the Q Bay Residences showroom at 6pm on Thursday evening, at least eight groups of potential buyers were talking to agents. An interested buyer, who wanted to be known only as Mr Teo, told TODAY that the constraints of the cooling measures do not negate housing needs. “In fact, it’s good that prices might cool off a bit, thanks to the cooling measures. That means if you have the need for a property, now is actually a good time for you to purchase. Demand is there,” he said.

Another viewer, known only as Mrs Gupta, said it is a good bet to buy now because property prices are going nowhere but up in the long term, despite the measures.

“Furthermore, the discount Q Bay is offering has made the purchase more affordable to us. The additional stamp duty is indeed a financial burden, but it’s partly offset by discounts.”

Although Q Bay Residences was launched at an average selling price of S$985 per square foot per plot ratio (psf ppr), from an originally planned price of S$1,050 psf ppr, F&N said that the average price of the units sold so far was S$1,007 psf.

Q Bay is one of several projects reported to have cut prices in the past two weeks, suggesting that developers were concerned that the cooling measures could have had an immediate chilling effect on the market.

But Mr Cheong said the concern may have been misplaced.

“We still have liquidity in the system, with deposits in Singapore banks climbing the wall for the past few years. Interest rates remain low and, more importantly, the population is still growing, en route to hit 7 million by 2030 according to DBS Vickers. So if you don’t buy now, when are you going to buy?” he said.

Meanwhile, further evidence of the state of the market comes from the PropertyGuru website.

“The number of listings of Singapore properties for sale and rent on PropertyGuru.com.sg has been rising this year, and there has been a further increase since the cooling measures were announced,” said PropertyGuru CEO Steve Melhuish. Nevertheless, developers are still cautious.

Mr Ang Wee Gee, Keppel Land’s CEO, said that while private property prices are unlikely to see a major correction, new home sales are likely to “come down quite a bit” this year.

As a result, it is not going to rush into launching new projects in the coming months and will adopt a wait-and-see approach.

And although sentiment appears to be holding up in the very short term, the true picture will not emerge for some months.

“It’s still too early to ascertain exactly how Singapore’s property markets will be affected.

“We’ve seen a whole range of predictions — some extremely pessimistic — as to where sales levels and prices will be heading this year. It could be mid-April before the true impact on the market becomes apparent,” said Mr Melhuish.

Source : Today – 26 Jan 2013

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