The resale property market remained lacklustre last month with fewer transactions in both the Housing and Development Board (HDB) and private segments, indicating the latest round of cooling measures are taking effect.
Sales of previously owned HDB flats fell 6.2 per cent to 1,271 units last month from 1,355 units in March, data from the latest Residential Property Flash Report by the Singapore Real Estate Exchange (SRX) showed. The decline, however, was much steeper at 36 per cent when compared with the 2,000 flats sold in April last year.
The sentiment in the non-landed private residential resale market was equally weak, with only 572 homes sold last month. This is down 6.8 per cent from the 614 units sold in March and a decline of more than 50 per cent from the 1,240 units transacted in April last year.
The downtrend shows that the government’s cooling measures, such as a 30-per-cent cap on mortgage servicing ratio (MSR) for public housing loans, are taking their intended effect, said ERA Realty Network’s Key Executive Officer Eugene Lim. “As a result, cash-over-valuation has come down because the MSR cap limits people’s ability to pay more cash,” he said.
According to SRX, the median overall cash-over-valuation (COV) fell for the third consecutive month in April, weakening by S$1,000 to S$30,000. This is the lowest monthly COV since September last year. And while the median resale price for HDB flats edged up 1.1 per cent on-month to S$465,000 in April, Mr Lim predicts it may cool going forward.
“The HDB targets to launch at least 25,000 BTO flats in 2013. With a higher success rate of attaining their perfect home in the new flat launches, buyers could turn away from the resale market. Together with the new cooling measures, demand is expected to fall and this will help keep HDB prices stable,” Mr Lim said.
Over at the non-landed private residential resale market, prices remained subdued. Prices for units in both the Core Central and Rest of Central Region fell 1.9 per cent on-month to an average of S$1,772 and S$1,267 per square foot, respectively. In contrast, resale prices in the Outside Central Region saw a 1-per-cent increase to S$1,022 psf last month.
Sentiment in the resale market is in stark contrast to that for new private homes, where transactions soared to a record 2,793 units in March on a combination of new launches and attractive pricing.
“Some potential buyers might have been lured away from the resale market by these new launches, while others might also be withholding their purchase in anticipation of further price drops due to the cooling measures,” said Mr Alan Cheong, Senior Director of Research and Consultancy at Savills.
But he added that it may be too early to make a conclusive statement that the cooling measures have worked.
“I would like to see a couple more quarters of decline in both the new sales and resale markets while the global economy recovers, before I say for certain that the market has softened because of the cooling measures,” Mr Cheong said.
Source : Today – 11 May 2013
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