Chilling effect on property market as cooling measures hit developers, buyers
Singapore
THE timing of the additional cooling measures came as a surprise on Thursday, as developers have just loaded up their landbanks over the last 18 months in anticipation of blockbuster sales in the second half of the year and beyond. Private property home prices have only risen 9.1 per cent over four quarters since the start of the recovery in 3Q17. This pales in comparison with the recovery in the previous cycle, when prices rose by 38.2 per cent from 3Q09 to 2Q10.
With new cooling measures hurting affordability from first-time buyers to investors, buying demand will take a hit. Primary home transaction volume can take a plunge of easily 30 per cent, as developers will tread cautiously with new launches. Although affordability of the buyers will be impacted, developers are unlikely to slash prices at this juncture, before the dust settles. We could expect a quiet quarter or two ahead with new home sales going back to on average 500 units a month for the rest of the year (with the exception of the month of July as buyers rushed into the three new launches before the new tax rates took effect).
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