Ravi Chandran
“The reality is that there are a lot of property transactions going on”, despite the new cooling measures, said Hari Krishnan. Mr Krishnan, chief executive of PropertyGuru, in speaking to CNBC added, “We continue to see price increases.”
Mr Krishnan was responding to question of if he was seeing evidence that the Government’s recent property cooling measures are really starting to hurt demand, in the sense that major projects being repriced or people waiting to see the full impact of the measures on the prices in the medium to long-term.
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Mr Krishnan said that in the first half of the year, people were transacting like crazy since the last 4 years. He noted that in the last 4 years, Singapore has seen prices drop with transactions dropping by about 70 per cent.
Mr Krishnan said: “But then in the first half, we saw a lot of people re-enter the market. And there was a fear around the price at which a lot of the supply which had been bought. The en bloc sale which had happened over the last 2 or 3 years. And so we saw a lot of transactions in the first half.”
He added: “The cooling measures have had an impact – one on the supply side. Some developers are lowering prices, the others who can hold are trying to delay their projects a little bit.”
But the reality is that there is still a lot of property transactions going on, he emphasised.
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“We continue to see price increases. Perhaps a little bit of dampening versus our forecast in the first half of this year,” said Mr Krishnan.
Adding: “But I think there has been so much demand, and it has been built up over 4 years. It is really about how much you want the demand to be dampened. And if you look at it, the Government is also trying to shorten-up the space from property loans – home loans had grown by about 34 per cent year-on-year as per MAS (Monetary Authority of Singapore). I think a lot of the cooling measures were also trying to reduce that a little bit.”
The CEO’s comments on mirrored Savills Singapore’s recent research report on property transactions here, which noted that private properties are more affordable now than they were in the 3rd Quarter of 2013. Alan Cheong, Senior Director at Savills, also added that the latest cooling measures did not lead to a dip in market sentiment, but have only prolonged the previously anticipated sharp price increase of private properties.
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The research report which noted that sales volume picked up in quarter 2 despite rising prices, pointed to new launches of private homes (excluding executive condominiums (ECs)), which rose 164.6% quarter-on-quarter (QoQ) to 2,437 units in Q2. The report said that the number of private homes that developers sold in in Quarter 2 of 2018, about 2,366 units, was 49.7% higher than the preceding quarter. In the secondary market, the transaction volume of private homes also jumped 28.6% QoQ to 4,820 units, which is the highest level since Quarter 2 of 2011.
Based on caveats registered in the 2nd Quarter of 2018, a total of 4,801 non-landed private residential units were purchased by Singaporean buyers. This figure is up 38.7% QoQ. The market share of this group of buyers also rose by 4.4 percentage points (ppts) QoQ to 77.4%, the highest since Q1/2012, noted the report.
Savills’ check of caveats for new property transactions of non-landed private residential units showed that some 3,178 units or 85.4% of the total units sold in the first half of 2018 were priced below S$2.0 million each.
The Urban Redevelopment Authority’s (URA) island-wide private residential price index continued to rise for the fourth straight quarter, in the 2nd Quarter of 2018, although the quarterly growth rate moderated slightly. A similar pattern in property transactions was found in the prices of high-end non-landed residential properties tracked by Savills.
In re-vectoring its earlier price predictions for the 2nd Half of 2018 batch of launches to end-2019, Savills suggested that price increase for 2018 will be slowed from 15% – 20% year-on-year (YoY), as earlier predicted to 10% – 12%.
“Moving on to 2018, for the first half of this year, prices rose 7.4%. Even if we subtract this from the 25% private housing affordability gains, private properties are still about 17% more affordable than they were in Q3/2013.
Savills further explained that the residential property market had expected further cooling measures, but that it was only the timing of the latest one which was unexpected. In calling the current cooling measures as a “known unknown”, Savills said that with current affordability levels much higher than they were in 2013, “a known unknown is less shocking than an unknown unknown.”
Combined with the markets’ adaptive abilities (i.e. these measures were a reprise of earlier measures), the measures did not induce a tear in the fabric of buyers’ expectations, claimed the report.
Nevertheless, in the immediate future, the sales volume of private properties is likely to be lower than anticipated, the report said. as most second-home buyers and foreign buyers will be priced out due to higher ABSD rates or will adopt a ‘wait-and-see’ attitude in the near term. It does not expect home prices to fall, and even if they do, it will not be a significant drop.
The central view for property transactions of the research was that steep price increases for private properties in the near term will be deferred.
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