Singapore home prices climbed marginally in the last three months after the government imposed more curbs such as Additional Buyers’ Stamp Duty for housing transactions and the lower loan-to-value, as shown by URA’s private property price index which was released today. The price growth moderated to just 0.6%, compared to the 1.8% increase in the previous quarter—reaching 213.2 points in 1Q13.
“The slower pace of price increase in 1Q13 suggests that the seventh round of cooling measures and new property tax policies have had the intended impact of cooling price escalation of private homes. The curbs have filtered out some investors and that’s seen in the slowed increase in prices and drop in resale and sub-sale transactions. Had it not been for the curbs, I believe that prices in the quarter would have risen much higher. The Y-on-Y price increase in 1Q13 was significantly higher than that of 1Q12, where overall private home prices fell by 0.1% last year during this period,” said Mr Mohamed Ismail, CEO of PropNex Realty,
The measures in January included an increase in the stamp duty for homebuyers by between 5% and 7% with permanent residents paying taxes when they buy their first home. Singaporeans will also have the levy starting with their second purchase.
Moderated price growth in all regions
Price growth had generally slowed down in all regions. In particular, price growth of non-landed homes in the Rest of Central Region (RCR) came to an almost standstill at 0.2% increase after increasing 0.9% in 4Q12. Prices of homes in the Core Central Region (CCR) increased by 0.6% compared to 0.7% increase in the last quarter. Price growth of non-landed private homes in the Outside Central Region (OCR) started to slip to 1.4%, albeit moderating from the 3.8% quarterly growth recorded in 4Q12.
Continued strong demand by first timers
“Home demand will continue to be supported by first-time home buyers and public flat upgraders, and further incentivized by developers’ creative marketing strategies. Developers are likely to continue dangling sweeteners to cushion the impact of ABSD to attract homebuyers, which have proven to be relatively successful in luring homebuyers as evidenced by the strong take-up rates of new private homes in 2013—where over 5,412 have already been sold compared to 4,353 units sold in 4Q12. These incentives may come in various forms, such as sensitive pricing, price discounts, and early bird or VIP preview prices, among others”, expounded Mr Mohd Ismail.
“New launches that are well conceptualized with good location attributes and attractive price offers would be enticing draws for prospective buyers. As such, I believe more Singaporean first-time homebuyers are likely enter the private residential market, as they continue to hunt for their first private home to take advantage of discounted prices offered by developers.
Government to keep a handle on home prices
The growing resistance towards further price appreciation, coupled with the new residential home supply that will come on-stream in the next few years, will keep price growth in check and contain the buying appetite of home buyers; hence, limiting their propensity to commit to high prices. Developers will also be sensitive to hike prices in fear of triggering another slew of measures.
Mass-market homes will continue to lead price increases this year, supported by demand from local buyers. Local buyers may fast-track their purchases in fear of more new cooling measures and increased competition from other buyers as predicted in a recent population white paper predicting increased headcount.
These factors combined should provide for stability and sustainability in the Singapore residential market for the rest of the year. Barring any unforeseen shocks, private residential property prices are expected to continue its generally flat growth, with projects that feature attractive locational and product attributes enjoying better upside potential. Mr Ismail expects the private property prices to grow by 3 to 4% for 2013, with the CCR and RCR registering only marginal growths, while the OCR is expected to perform well, with growth of 4 to 6%.
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