Cooling measures aimed at reducing activity in the Singapore property market are taking effect, according to some real estate experts but the results are patchy with prices continuing to rise in some areas.
The NUS Private Residential Price Index, which tracks month on month price movements of private, non landed residential properties, fell 0.4% in February, with prices in non central areas falling 1.5%. But prices of central area properties increased by 1%.
And not everyone is convinced that the change is significant. According to Liang Thow Ming, head of residential services at Credo Real Estate, the overall decline was too marginal to confirm a trend.
The cooling measures introduced in January, which included higher stamp duty for sellers and a reduction in the amount of loans available, though are likely to have an effect, he believes. ‘The market is taking a breather compared to how it was behaving last year and in January this year,’ he said.
Indeed prices of prime and suburban resale homes continued to rise in the first quarter of this year, albeit at a more moderate pace, while luxury resale home prices remained unchanged, the latest report from real estate services firm DTZ shows.
It found that the average resale price of leasehold condominiums in suburban areas inched up 0.8% to S$665 per square foot, while average resale prices of freehold non-landed condominiums were up 0.4% to S$1,525 per square foot. Luxury condominiums in prime areas remained unchanged at an average of S$2,630 per square foot for the second consecutive quarter.
‘We expect the pace of increase in prices to continue to slow down and plateau. There is more uncertainty this year, not just from the possibility of more cooling measures, but also from the recent regional events in the Middle East and Japan, the full impact of which are still not known,’ said Chua Chor Hoon, head of DTZ South East Asia Research.
More cooling measures may be needed as foreign buyers do not seem deterred by prices. Mass market prices of private apartments in Singapore climbed to new highs in the first quarter of the year, mainly driven by demand from Mainland Chinese buyers.
Average values of properties are now at S$1,935 per square foot in prime areas, and S$1,043 for non-prime areas, the highest since the first quarter of 2008, according to property consultants Jones Lang LaSalle.
Chinese, Indonesian and Malaysian buyers accounted for at least half of the sales in the first quarter of the year with Chinese buyers overtaking Malaysians in purchasing prime residential units and were second to Indonesian buyers.
Experts point out that the surge in Chinese buyers in Singapore coincides with policy tightening in China. ‘While we do not expect a repeat of what is observed this past quarter, we can expect the number of Chinese buyers to continue at a healthy level as seen in previous quarters as the fiscal and monetary policy in China remains conducive to overseas investment by the wealthier Chinese,’ said Chua Yang Liang, head of research for South east Asia and Singapore at Jones Lang LaSalle.
Rental values in the central and east coast regions have remained stable from levels in the fourth quarter of last year, while prime properties saw rental values only growing marginally at 0.7% quarter on quarter from last year. Rental demand for smaller units softened while larger four bedroom units in prime districts were the only residential unit type to see an increase in rental value for this quarter.
Expats are helping to keep prices high. ‘The preference of the expatriate community is for larger four bedroom apartments of at least 2,800 square feet. The smaller size units are not particularly attractive as the majority of middle and upper management families relocating prefer spacious four bedroom units that come with entertainment areas,’ said Jacqueline Wong, head of residential at Jones Lang LaSalle.