Singapore’s real estate market keeps soaring, creating a challenge for regulators as bubble concerns are brewing. Government efforts haven’t been a total failure, as they have seen some success in reducing speculation and sales in the key suburban condo segment, however, they have yet to succeed to cooling the overall market. See the following article from Property Wire for more on this.
Attempts to curb the red hot property market in Singapore don’t seem to be working as the latest figures shows that a higher than expected number of private properties were sold in October.
The city state’s Prime Minister Lee Hsien Loong has said that property market was a matter of concern and needed careful monitoring to avoid the creation of a bubble. ‘Our property market has been taking off, which is causing some consternation,’ he said recently.
‘We have had a series of measures to squelch the property market, but liquidity is awash, sloshing around the whole region. We are watching carefully. The last set of measures was announced at the end of August, they seem to have dampened sentiment some, but we will have to watch and see,’ he added.
Singapore announced measures to cool its residential market in August including a reduction in the amount those with existing mortgages could borrow to buy second properties and extending a stamp duty on those selling property within three years of purchase.
But some 1,058 new private properties were sold last month, up from 911 in September, leading some property analysts to predict a possible record number of sales for the whole year.
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The increase is even more pronounced if sales of executive condominiums (ECs), an upscale type of public housing, are included. Taking ECs into account, sales surged 74% to 1,587 as buyers flocked to purchase the first new EC projects for five years.
Experts said, however, that the buoyant figures did not necessarily mean the Government’s property cooling measures in August were not working. They point out that sales in the target segment, mass market condos in suburban areas, had fallen by about 25% compared with the figure in September.
In contrast, homes in the core city center where wealthier buyers are less adversely affected by the buying restrictions saw bumper sales of 335 units. This was almost four times the sales volume in the previous month. In city fringe areas, 271 homes were sold, up 20% from September.
Chua Yang Liang, head of research at Jones Lang LaSalle believes that cooling measures announced in August coupled with the rolling out of EC sites will help to reduce mass market demand.
But Ong Kah Seng, Cushman & Wakefield’s senior manager of Asia Pacific research, says there appears to be little let up in demand with developer sales of private residential units at 1,000 units each in the two months after the measures were announced.
Analysts suggested that another factor behind the overall rise in home sales was that buyers returned once the impact of the new property rules became clearer. The rosy economic outlook, low interest rates and robust stock market have also seeded optimism and confidence in the property market, they added.
‘Several home buyers who have been on the sidelines for about a month might have decided to proceed with purchasing properties that offer investment potential or a possibility for capital appreciation,’ said Ong.
Tay Huey Ying, director of research and advisory at Colliers International said private home sales this year reached 13,109 units in the first 10 months of the year and could be on track to beat the 2007 record of 14,811 units.
‘It shows us that speculative purchases are a minority. The market is not only flush with genuine buyers but also those who are financially strong, such that they can still afford to purchase despite the higher cash upfront needed,’ she explained.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.