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Genuine homebuyers dominate the private property market in 1Q2012

Latest Property Real Estate News - Published on 27/04/2012

Following the implementation of the Additional Buyer’s Stamp Duty in December 2011, the first quarter results in 2012 is a much-watched data as policymakers monitor the impact of this recent cooling measure.

And as predicted, the private property price index saw the first price decline since 3Q2009 during the financial crisis, with a marginal dip from 206.2 points in 4Q2011to 206.0. A slight difference from the flash estimates, the price index actually increased 1.1% for the OCR Q-on-Q, while both the Rest of Central (RCR) and Core Central (CCR) regions depicted a 0.6% dip in prices in 1Q2012.

Gradual easing of prices in CCR and RCR to begin from now on

“The decline in CCR and RCR prices are within expectations, the performance of both the CCR and RCR regions has been rather soft ever since the ABSD was imposed, and we expect prices in these regions to continue easing. The less robust activities are experienced in the CCR and RCR as most sellers in these regions have been holding out prices in the weaker demand environment, however, when sellers decide to sell at lower prices, we are predicting that prices in CCR and RCR to experience further price corrections in the coming months,” stated Mr Mohamed Ismail, CEO of PropNex Realty.

 

Mr Ismail expects the private property prices to decline by 5% for 2012 in the CCR and RCR due to the weaker demand since the implementation of ABSD, while the OCR is expected to perform well, with marginal price increment of 3 to 5%.

Exuberance in the OCR set to continue

“We are now seeing a higher percentage of home purchases made by genuine homeowners or investors with a mid- to long-term view, as reflected in a modest 1.1% increase in the prices in OCR and the transaction volume in this region,” revealed Mr Ismail.

OCR prices are likely to remain resilient due to ample liquidity, low interest rates and strong HDB resale prices (he cites the 0.6% increase in the HDB’s Resale Price Index in 1Q12). Mr Ismail expects that the healthy sales momentum in the OCR to carry on in 1H12, barring additional cooling measures.
Buyer’s market may emerge

With prices exceeding historical peaks, potential homebuyers/upgraders have become increasingly resistant towards further price growth. Coupled with the continued injection of land supply for the development of private residential housing, Executive Condominiums (ECs) and the planned 25,000 new Build-To-Order (BTO) flats this year, there is a wide array of choices for those looking for a new home, or those looking to upgrade.

“While the low interest environment could support home buying in 2012 in the primary market, the sluggish secondary market will likely put pressure on regulating prices. This is evident in the high end/luxury market which is already languishing in slow sales activity as potential homebuyers with mid to long-term perspectives, continue to look for more value deals in the OCR. In the mass market segment, demand will most likely be supply-driven,” continued CEO Mohd Ismail.

With a host of factors working together to take the heat off private property prices this year, further government intervention in the short term is unlikely. Therefore, barring the risk of further cooling measures; it is predicted that the overall private property prices could fall by up to 5% for the whole of 2012.

END

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Carolyn Goh
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P & N Holdings Pte Ltd (holding company of PropNex Realty)
480 Lorong 6 Toa Payoh #10-01 HDB Hub East Wing Singapore 310480
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