With affordability being a key consideration especially after the imposition of the additional measures in January, homebuyers continued to be drawn to the relatively more affordable mass-market homes in the Outer Central Region (OCR). In 2Q 2013, price increase in the OCR contributed to the lion’s share of price increase as the private property price index increased to 215.1, or up 3.8% from Q-o-Q in 1Q 2013. Overall, market sentiments remained relatively upbeat despite initial chills brought on by the successive rounds of market cooling measures. However, on a yearly basis, private residential property prices continued to exhibit an upward trajectory.
In 2Q13, price growth concentrated in the mass-market segment. Mass-market (OCR) price growth more than doubled to 3.8% Q-on-Q (from 1.4% in the previous quarter), while growth in the high-end segment bore the brunt of the impact of the successive round of cooling measures as it slipped 0.2% (from +0.6%). Prices in the mid-tier segment (RCR) remain unchanged Q-o-Q (similar to +0.2% in 1Q13).
Impact of the latest Debt Servicing Framework by MAS
“The latest new debt servicing framework introduced by MAS on with interest rates pegged at 3.5% may prompt potential homebuyers to take a more discretionary view of home buying with the reduced affordability levels. We view MAS’s new rule for property loans as a move to instill more financial prudence, rather than target the property sector.
The intention is to moderate investment demand for private properties in Singapore and promote a more stable, prudent and sustainable property market, in view of the large pool of external liquidity, strong buying interest abroad and land scarcity of Singapore. The government’s ultimate aim is for the residential property market prices to move in line with economic fundamentals at a sustainable rate. The main intention of the measures is taking the foot off the accelerator rather than put the foot on the breaks of property prices,” added Mr Mohd Ismail, CEO of PropNex Realty.
Strong underlying demand for properties
"We envisage that the buying sentiment in the private residential market would continue to remain stable, underpinned by continuing inflow of liquidity, low interest rates and the slew of upcoming project launches. In addition, prospective homebuyers who may be sensitive to price levels with the higher ABSD and cash down payment, are also enticed with the wider choice of residential projects from the new launches.”
“Projects with good location attribute and attractive price offers would be enticing draws for prospective buyers. Given the abundant choices in the market, developers are likely to be nimble with pricing to avoid hitting buyer’s price resistance level, especially after the implementation of a 60% TDSR threshold. Nevertheless, the mass market segment will remain resilient as they are well-supported by genuine upgraders. We are cautiously optimistic that private property prices could rise by 2% for the whole year, with OCR properties to rise by up between 6 - 7%. With the introduction of TDSR, it is expected that volume of transactions will take a dip of 20% while prices remain muted,” commented Mr Mohamed Ismail, CEO of PropNex Realty.
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