The impact of the Additional Buyer’s Stamp Duty announced on 8 December 2011 was clear from the 1Q12 flash estimate results released by URA today.
The URA’s Price Index saw the first price decline since 2Q2009 during the financial crisis, with a marginal dip from 206.2 points in 4Q2011to 206.0. URA’s flash estimates showed that the price index actually increased 1.2% for the OCR Q-on-Q, as compared to a decrease of 0.7% and 0.9% for the Rest of Central (RCR) and Core Central (CCR) regions respectively.
“The cooling measures of the recent Additional Buyers’ Stamp Duty and the reduced Loan-To-Value ratio on additional mortgages to just 60% as well as the increased Seller’s Stamp Duty (SSD) of up to 16% introduced by the Government in January 2011 had effectively stamped out short-term speculation in the private property resale market,” explained Mr Mohamed Ismail, CEO of PropNex Realty.
“We are now seeing a higher percentage of home purchases made by genuine homeowners or investors with a mid- to long-term view, as reflected in a modest 1.2% increase in the prices in OCR and the transaction volume in this region (according to PropNex data). The less robust activities are experienced in the Central Core Region and Rest of Central Region as most sellers in these regions have been holding out prices in the weak demand environment, however, when sellers decide to sell at lower prices, we are predicting that prices in CCR and RCR to experience price corrections in the coming,” revealed Mr Ismail.
“Investors are now more cautious about the CCR and RCR, given the inhibitive nature of the lower LTV and drastically increased SSD announced in January 2011. As such, some investors are now turning to the OCR where the lower quantum will allow them to invest within their budgets.”
Mr Ismail expects the private property prices to decline by 5% for 2012 in the CCR and RCR due to the weaker demand since the implementation of ABSD, while the OCR is expected to perform well, with marginal price increment of 3 to 5%.
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