New private home sales may fall by about 63 percent for the month of July, due partly to the introduction of new loan restrictions in June, property analysts said.
In June, over 50 percent of the 1,806 new residential units sold came from two projects - Jewel @ Buangkok (pictured) and J-Gateway, media reports said.
Based on preliminary figures, only 664 new private homes excluding executive condominiums (ECs) were sold in July, noted PropNex Realty. The low take-up rate was seen across all segments including the city, city fringe and suburban areas.
Industry players attribute the slower sales to a lack of major new launches and the implementation of the Total Debt Servicing Ratio (TDSR) framework. The new rules require a borrower to provide the bank with details of all his or her debt obligations, including non-property and property loans.
Before the TDSR was rolled out, buyers only needed one day to close a deal. But with the longer loan application process, they now require 10 days.
This has prompted developers to change their marketing strategies, property agents noted.
PropNex CEO Mohamed Ismail said: “Prior to TDSR, the preview will be over the weekend or on a Friday, and then Saturday, Sunday the booking starts. Today, the norm is most developers open up their showflats for a preview, 10 to 14 days and during the preview most of the buyers walk in and select a unit with an expression of interest, and then get the bank to give an in-principle approval. And only after 10 to 14 days, the booking starts.”
Agents added that the longer process had discouraged buyers from purchasing the units.
Christine Li, Research Head at OrangeTee, said: “Usually agents took about four to six weeks to close deals, but because of TDSR, they are taking a bit longer, about eight weeks on average. This is partly because some of the buyers they are reassessing their affordability. Due to TDSR, they are not sure whether they still can get the loan quantum they previously wanted.”
Nikki De Guzman, Junior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email firstname.lastname@example.org