Sales plunge 49% while prices dip 0.1% following latest property cooling moves by Govt
The latest round of property cooling measures and the cumulative effect of three other rounds implemented since 2011 to rein in a buoyant market appear to have slowed growth in private home prices and sales, a study by OrangeTee & Tie Research found.
While prices continued to rise in the aftermath of three previous rounds, they fell by 0.1 per cent from $1,513 per sq ft to $1,511 psf after the July 6 measures.
That suggests the compounded effect of previous measures, coupled with the latest round, did finally slow price growth, Ms Christine Sun, OrangeTee’s head of research and consultancy, said.
Effective July 6, the additional buyer’s stamp duty (ABSD) was raised by 5 percentage points for Singaporeans and permanent residents buying a second, third or subsequent residential property, as well as for foreigners buying any residential property.
The loan-to-value (LTV) limits were tightened by 5 percentage points for all housing loans granted by financial institutions.
The Government said the sharp increase in private home prices, if left unchecked, could run ahead of economic fundamentals and raise the risk of a destabilising correction later, especially with rising interest rates and the strong pipeline of housing supply.
The OrangeTee study examined prices and sales done 62 days before the July 6 measures (May 5 to July 5) and 62 days after (July 6 to Sept 5).
A similar analysis was done for previous rounds of ABSD hikes, which came in December 2011 and January 2013, and a total debt servicing ratio (TDSR) revision in June 2013.
The study also took into account the skewed performance on July 5: 1,018 units in Riverfront Residences, Park Colonial and Stirling Residences were sold that night as buyers rushed to beat the new cooling measures.
Including those numbers, sales of non-landed homes plunged 49 per cent from 5,009 units before the measures to 2,543 units afterwards.
Excluding the last-minute buying frenzy, transactions fell by 36 per cent. That is still more than the 33 per cent drop after the December 2011 hike and the 33 per cent fall after the TDSR was revised.
Even without the July 5 impact, transactions in the outlying areas, or outside of central region (OCR), fell a hefty 48 per cent, due to fewer new projects launched there after the latest measures. Demand in the city fringes, or rest of central region (RCR), slipped 11 per cent.
Tighter financing rules and increased ABSD of up to 20 per cent for foreign buyers hammered sales in the prime district, or core central region (CCR), which saw transactions fall 45 per cent, the study said.
JLL senior consultant Karamjit Singh said the TDSR was “the last straw that broke the camel’s back”.
“It brought down prices and volumes for three years or so until early 2017 when sentiment started picking up due to pent-up demand and the success of a series of en bloc sales. Then more developers got into the act, and prices started rising in third quarter 2017,” he said.
He added that the market is about to see quite a bit of new supply coming on, “so developers have to ensure that their pricing for new launches is sensitive”.
At the 735-unit Parc Botannia, only six units have sold post-measures, compared with 57 before July 6. Of the 552 units launched as of August this year, 440 units have been sold to date, Ms Sun said.
Some projects are holding their ground. Stirling Residences saw 209 units sold after the measures, up from 183, partly because of its location and proximity to the Queenstown MRT station.
“Source:[Private home sales hit by July 6 measures] © Singapore Press Holdings Limited. Permission required for reproduction”
