Although the private property’s price index recorded a new high of 206.2, the 0.2% growth is the lowest percentage increase per quarter since the financial crisis of 2008. The marginal increase of 0.2% Q-on-Q, compared to the 1.3% increase in the 3Q11 reflects a cautious market sentiment due to the uncertain global economic outlook and the Additional Buyer’s Stamp Duty (ABSD) implemented on December 8.
It is even projected that the private property sector will probably hit a negative price increase in the next quarter with the onset of the ABSD that was introduced in December 2011. For 2011, prices of non-landed properties increased by 4.0% in CCR, 4.5% in RCR and 7.7% in OCR, compared with 14.2%, 17.6% and 15% respectively in 2010. The moderating prices with the main contributor of growth in the Outside Central Regions (OCR), was due to the mass market condominium launches in these areas. It was projected that the mass market demand will still remain strong as most HDB upgraders will now purchase or invest with mid to long term perspectives.
Forecasts for 2012
The latest round of cooling measure which include, the ABSD, a lower Loan-To-Value ratio cap of 60% and an extended minimum holding period for imposition of Sellers’ Stamp Duty (SSD) to four years, with the SSD increased to up to 16%, targeted at speculators and encouraged more home buyers to adopt a mid-to-long term view for their property purchase/investment. The impact is evident in the lowest transaction volume in the Core Central Region (CCR) in 2011. For 2012, Mr Ismail forecasts an overall 5–8% decline in prices for private residential properties in CCR.
Mass market condominiums in the Outside Central areas should see a moderation of 3–5% dip, as new developments in this area are launched at prices that are sensitive to the cooler market sentiment.
With the introduction of more Executive Condominiums in 2012, the mass market private properties should see price stabilization as the ‘sandwich’ class is given more opportunities of owning a private property. With increased supply anticipated, Mr Ismail expects prices to further soften, resulting in an overall price correction of approximately 5% dip in the private property price index for 2012.
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