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Strong sales volume has been the cause for the government’s concern that a bubble was building up, says HAN HUAN MEI

DEFYING all expectations, Singapore’s residential property market has rebounded in the thick of the worst recession the country has seen. Buyers turned up in droves at recent project launches, sending the home sales figures in July to its highest level since the peak in June 2007. New home sales between January and August were just 21 per cent below the total number of homes sold for the whole of 2007.

But going forward, prices of mass market and mid-tier projects are expected to face some resistance. The number of launches is also expected to be limited for the rest of the year. Even as the market was debating the outlook, the government announced anti-speculative measures mid-month which makes it almost certain that sales volume and prices will moderate.

The robust residential market of the past few months seemed to mirror the peak in 2007, notwithstanding the recession. Market sentiment ran high as the stockmarket rally continued for four months starting in March. The strong take-up of new homes, led by mass-market projects back in February, filtered up to the mid-tier segment by April and to the prime segment by May.

Buyers have been prowling showflats, concerned that home prices may be rising again after having corrected from peak levels. It appears that what started out as pent- up demand progressed into investment demand, and to some extent, speculative demand. Developers launched 10,496 new homes for sale from January to August, compared to 6,107 units in 2008. The total number of new homes sold up to end-August was 11,721 units, far exceeding the 4,264 new homes that were sold in all of 2008. Continue reading →