Despite lower transaction volumes, prices of resale private homes remained flat in Q3 as the Total Debt Servicing Ratio (TDSR) begins to bite, revealed a DTZ report.
Notably, the TDSR framework has lengthened the loan application process, hindering multiple property owners from investing further or purchasing residential properties.
At the same time, sales of new private homes (excluding ECs) fell to 1,224 units in Q3 from 4,538 in Q2.
Over in the secondary market, sales volumes continued to decline in Q3 with 1,227 units sold, down from 2,405 units in the previous quarter and 4,358 units in Q3 2012.
Resale prices stayed unchanged across all non-landed private residential segments in Q3 despite lower sales, based on a basket of existing properties monitored by DTZ Research.
Prices of freehold resale condominiums in prime districts 9, 10 and 11 were flat after posting a 1.0 percent gain in the first half of 2013, while resale prices of luxury condominiums remained unchanged for five consecutive quarters. In suburban areas, resale prices of leasehold condos were also flat after posting a 2.2 percent hike in 1H2013.
“As the TDSR measures limit the amount of loans buyers can take, they are now more selective in their purchases even as they have more choices. Demand will therefore gravitate towards developments that offer buyers better value such as those that are competitively priced or projects that are well-located with easy access to amenities,” noted Margaret Thean, Executive Director, Residential at DTZ.
“Looking ahead, resale transaction volume is likely to remain weak as the TDSR measures and the earlier cooling measures continue to work their way through the market. There is limited incentive for individual sellers to sell their properties unless they receive a premium as their replacement cost is now higher. In the absence of any major economic shocks, they are also unlikely to sell their properties in distress. Nonetheless, some downside pressure on resale prices could be expected going forward, against the backdrop of a strong pipeline supply and lower launch prices of new projects,” said Lee Lay Keng, Research Head at DTZ Singapore.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email firstname.lastname@example.org