Private home resale deals up 16.7% in Jan
Threefold increase from a year ago driven by rush to complete transactions before new cooling measures kick in
Business Times - FEBRUARY 09, 2013
Resale volumes for private residential homes jumped 16.7 per cent month-on-month to hit 920 transactions in January, as buyers rushed to complete transactions before the new property cooling measures kicked in.
The measures which kicked in on Jan 12 included additional buyer's stamp duty (ABSD) rates being raised between five and seven percentage points and tighter loan-to-value limits on housing loans.
The 920 transactions achieved was almost three times the 309 resale transactions seen in January last year. This however could be attributed to Chinese New Year falling on January last year and the pullback in demand witnessed with the initial introduction of ABSD in December 2011.
Driven by bargain hunters, suburban home sales in the outside central region (OCR) saw the greatest increase in resale volume, rising 30 per cent to 501 units; transactions of homes in the city fringe (rest of central region or RCR) increased by 17 per cent to 229.
Conversely, resale volumes for homes in the core central region (CCR) declined 9 per cent to 190 units in January, according to data from SRX.
Homes in the RCR and OCR region gained 2.5 per cent and 1.1 per cent respectively in January to reach $1,256 per square foot (psf) and $997 psf respectively. In contrast, homes in the CCR saw a drop of 2.9 per cent month-on-month to $1,878 psf.
"After the latest round of cooling measures, buyers could have shifted their demand towards smaller and more affordable units in view of the tighter financing restrictions and higher cash outlay," suggested Lee Lay Keng, head of Singapore research at DTZ.
With new home prices hitting fresh highs, buyers have turned to the resale market in search of bargains, said ERA Realty key executive officer Eugene Lim. However, the CCR experienced a drop as foreigners typically constitute about 30 per cent of purchasers of high-end properties.
"High-end to luxury properties have started to recover a bit the last quarter from the ABSD imposed in 2011 but this has taken another hit (following January's cooling measure).
"In addition, high-end to luxury properties have excess unsold completed inventory and is already lagging behind the suburban market," said Mr Lim.
Lee Sze Teck, senior manager of training, research, and consultancy at DWG said transactions in February could remain subdued with some buyers staying on the sidelines.
"But if prices hold, these buyers are likely to enter the market and send transaction volume up in March and April. Prices in the private residential market are likely to stay stable in 2013."
On the public housing front, the resale market showed signs of stabilising, with cash-over-valuation (COV) rising just $1,000 to $34,000 in January and overall median resale price dipping 0.7 per cent to $457,000.
The stabilisation was probably due to the government committing to build at least 23,000 flats in 2013, said DWG's Mr Lee. Indeed, the reduced mortgage service ratio (MSR) will serve to cap the COV paid for resale flats.
"To meet the lower MSR, buyers have to either lower the loan quantum or buy a smaller resale flat. This means that the bigger resale flats (five-room and above) will face downward pressure on the COVs while the smaller resale flats will see more interest.
Taking into account these factors, COVs could ease by up to 10 per cent in 2013," said Mr Lee.
It is estimated that 1,500 resale flats were transacted in January, compared to the 1,560 monthly average seen in the last quarter of 2012. Overall, HDB median rents remained unchanged at $2,400.
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