Tuesday, January 15, 2013

Private home sales to spiral down by 20%

What else is there to blame?

Knight Frank recently released their views on the potential impact of the lates propert cooling measures on private home sales.

Sales volume in the New Sales and Resale markets are likely to dampen in the coming months. Whilst pent-up home buying demand is still strong, the higher stamp duties, tighter Loan-to-value limits and higher cash down payment would deter home buyers who do not have the cash resources to materialize their planned purchases.

Some would choose to stay at the sidelines waiting to see where home prices will be in the next few months before making decision. Other investors may divert their attention to overseas properties to search for attractive yields and potential capital appreciation.

Here's more from Knight Frank:

Previously we had expected the total sales volume for new private homes in 2013 to range from 15,000 to 18,000 units. In view of the latest cooling measure package, we lowered the forecast by 20 percent from 12,000 to 14,000 units for the whole year, or 10 to 20 per cent lower than the 3-year average annual developer sales volume of 15,628 units from 2009 to 2011.

Developers are likely to hold back unlaunched developments probably after Chinese New Year. Launched projects are likely to see enhanced marketing strategies such as furniture vouchers and greater discounts to entice homebuyers.

The higher ABSD would significantly impact buying interest for high-end residential properties from foreigners and investors, who are the main purchasers for this luxury class of homes.

As at end of 4Q 2012, the proportion of foreign buyers (including PRs) buying non-landed properties in the CCR is estimated at 37 per cent. This proportion is expected to fall as many wealthy foreigners would be presented with alternative regions for property investment.

With this round of cooling measures, the competitiveness of Singapore as an ideal place for residential property investment by high-net worth individuals is noticeably compromised.

Nonetheless, the conducive business conditions, strong Singapore Dollar and stable fundamentals are key strengths of Singapore, which would serve to attract foreigners with a medium horizon to invest in Singapore luxury homes.

The higher ABSD imposed on Singaporeans and PRs from this round of measures would reduce sales volume of homes in the Rest of Central Region and Outside Central Region in the near term. PRs would be more discerning and price sensitive in the purchase of their first private home.

Singaporeans who have one existing property is likely to hold off their investment decisions for a second property due to the 7 per cent ABSD imposition.

First-time Singaporean homebuyers, who are unaffected by this round of cooling measures, would be the key group of buyers to support the mid-tier and mass market residential segment.

This may in part offset the reduction in homebuyers who are kept out of the market due to the more restrictive measures. However, the majority of such prospective buyers are likely to wait at the sidelines for now to monitor price changes, before committing to buy a private home for investment or occupation.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
Email: marshe_inc@yahoo.com.sg
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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