More measures will harm property market

Data for Q1 2012 released last week by the Urban Redevelopment Authority (URA) showed that residential property prices in Singapore dropped for the first time since Q2 2009, recording a 0.1 percent slip. This is in contrast to the 0.2 percent rise seen in the previous quarter.

According to OrangeTee Research & Consultancy, the decline “is within market expectations, as the market starts to feel the effects of market cooling measures introduced in December 2011”.

However, landed property prices are still resilient, marking a marginal increase in the quarter.

“The resilience in landed property prices can be attributed to the scarcity of landed properties as well as the profile of landed property buyers; less susceptible to market conditions,” said the firm.

While overall rents for Q1 2012 rose by 0.3 percent, it is still lower than the 0.4 percent growth in Q4 2011. Occupancy rates also dwindled marginally to 94 percent from last quarter’s 94.1 percent.

“According to URA’s statistics, a total of 10,796 units from developments with sales licenses are expected to be completed for the whole of 2012. As this is 10 percent above historical level, we expect the weakening rental market to cause occupancy rate to soften in the coming quarters, especially in the high end market,” said OrangeTee.

The main concerns lie in policy and supply. “The threat of more government cooling measures which could again have a negative impact on sentiments and possibly overly restrictive policies which might create further negative image of Singapore as an investment destination,” it said.

The slew of new project completions from 2013, along with a tightening of the immigration policy, could also affect rental demand.

Moving forward, “improving economic indicators and a recovery in the stock market has boosted confidence of buyers which has resulted in a strong primary sales market”.

“Without external factors that could trigger a rapid destruction in wealth, we maintain our view that the market will likely avoid a sharp fall in prices in 2012,” noted OrangeTee.

Source : Property Guru

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