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SG New home sales may have passed peak: report

Property Here - Friday, August 16, 2013

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The steep decline in new private home sales for the month of July indicates that transaction volumes of such properties has likely passed its peak, revealed a report from wealth management firm Religare.

According to data released Thursday by the Urban Redevelopment Authority (URA), sales of units launched by developers (excluding ECs) fell a whopping 73 percent to just 481 units last month. This is the lowest sales volume since December 2009. 

Moving forward, analysts believe that sales volumes will continue to slow in the coming months. 

“We expect new homes sales to fall by 10 to 20 percent over 2H2013 (ending the year with ~17,000 new home sales, down 20 to 30 percent from 2012),” said Religare, attributing the drop to the latest round of cooling measures and the Total Debt Servicing Ratio (TDSR) framework. 

“Furthermore, while developers were already absorbing some of the ABSD earlier, in our view, they might have to absorb a larger portion to entice buyers, thus, prices might correct by five percent over the rest of the year.”

Responding, Mohamed Ismail, CEO of PropNex Realty, said: “The latest TDSR framework introduced by MAS with loan interest rates pegged at 3.5 percent may prompt potential home buyers to take a more discretionary view of home buying with the reduced affordability levels.”

“We expect a more subdued private residential market ahead, with developers likely to be more nimble with pricing to avoid hitting buyers' resistance levels. We also foresee that many potential buyers will likely be more cautious before making a purchase decision as they will have to take into account all the rules before buying a property,” he added. 

Ismail expects private home sales this month to reach around 700 to 800 units (excluding ECs). But the market is expected to rebound from September onwards “as home buyers get used to the new property loan rules”. 



Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@allproperty.com.sg