[SINGAPORE] Most subsales of private apartments and condos in the first half of this year involved relatively long holding periods, according to a study by Ngee Ann Polytechnic.
This suggests that the seller's stamp duty (SSD) is effective in curbing speculative residential property deals. Subsales are secondary-market transactions in uncompleted projects.
In the high-end segment, nearly all subsale caveats for non-landed private homes lodged for H1 were traced to units that had been bought in 2009 and 2010 and which therefore would not have incurred SSD. There was no caveat for units in Core Central Region (CCR) that had been previously bought in 2012 to 2013.
In the mass-market segment, 73 per cent of subsale transactions involved properties that had been bought in 2009 and 2010.
SSD was introduced in 2010 for residential properties bought on or after Feb 20, 2010 and flipped within a year. Later that year, SSD was extended to properties bought on or after Aug 30, 2010 and sold within three years.
Since early 2011, the holding period has been extended to four years with sharply higher rates. Residential properties bought from Jan 14, 2011 and sold within four years incur SSD of 16, 12, 8 or 4 per cent if they are sold in the first, second, third or fourth year of purchase respectively.
"Back in 2009, pre-SSD, there were units flipped within the same year of purchase," said Feily Sofian, a lecturer at Ngee Ann Polytechnic's School of Design & Environment.
"However, in H1 2014, there were no subsale caveats registered that involved units bought last year."
Subsales are secondary-market transactions of units in projects that have yet to receive Certificate of Statutory Completion and where the titles for all the units have yet to be issued. They are seen as a gauge of the level of property speculation.
Given their long holding periods, most of the H1 subsale transactions were profitable, though the proportion of subsales that were in the black was higher in the mass-market segment, where prices have climbed at a faster clip from the Q2 2009 trough.
Seventy-five per cent of the 40 subsales in CCR made money. In Outside Central Region (OCR), where mass-market homes are located, the proportion is 97 per cent, out of 142 subsales.
Profit or loss was calculated by comparing the latest price against the price at which the unit had previously changed hands, factoring in the prevailing SSD rates (if applicable). However, other costs such as interest, legal fees and the additional buyer's stamp duty (ABSD) were not counted.
Ms Sofian, who teaches the real estate business diploma course, said that ABSD was not included because it rested on who the buyer was and how many residential properties they own - "which is something we can't ascertain".
Ngee Ann mined Urban Redevelopment Authority's Realis data for caveats of subsales of non-landed private homes in OCR and CCR in H1. It then sought out caveats data for previous transactions of these units. As at Aug 11, 2014, there were 147 subsale deals in OCR in H1, with previous transaction information traced for 142.
The average profit on the 138 profitable subsales in OCR was S$221,275 (translating to a 24 per cent gain). As for the four remaining subsales that were in the red, the average loss was S$35,646 (or 5 per cent).
Giving a split of the profitable subsales in H1 by the year in which the units had been bought, Ms Sofian said that in OCR, the biggest average profit of S$379,603 accrued to units that had been bought in 2009 - the nadir-year of the Singapore private housing market after the global crisis.
Subsale gains thinned for units bought in subsequent years, with those picked up in 2012 and subsold in H1 2014 posting an average gain of S$104,500. The four unprofitable subsales involved properties bought in later years, 2011 and 2012.
In CCR, there were 42 subsales in H1 and of these, caveat matches of previous transactions were found for 40 properties. Among the 30 profitable subsale transactions, units bought in 2009 and 2010 posted average gains of 14 per cent and 16 per cent respectively.
These are lower than the average gains for subsale transactions of mass-market units in the first-half involving units bought in the same years - 37 per cent for units picked up in 2009 and 25 per cent for units bought in 2010.
"This is in line with the market trend, as seen in the stronger rise of 72 per cent in URA's price index of non-landed homes in OCR between Q2 2009's trough and Q2 2014 - compared with a 42 per cent increase in CCR over the same period," said Ms Sofian.
The polytechnic collaborated with the www.propertytrends.com.sg website started by SLP International executive director Tony Koe in his private capacity .
Subsale transactions will probably remain subdued in coming months.
Knight Frank chairman Tan Tiong Cheng said: "So long as the low interest rate environment continues, the authorities are unlikely to remove cooling measures.
"Investors are now caught not only by SSD when they need to trade or swap private residential properties to rebalance their portfolio, but deterred from making a purchase in the first instance due to the ABSD. On top of that, the foreign buying contingent is still missing - which reduces liquidity in the market.
"First-time buyers will be spoilt for choice."