Harsh new cooling measures seen to kill property sales momentum in 2011

Developers’ sales volume is expected to dip sharply to the 500 to 800-unit range in January and February 2011 as market players re-assess their position following the harsh set of cooling measures announced on 13 January 2011.

In a statement, Colliers International said a moderate rebound in sales volume may be expected when the bulk of the shock from the announcement has been absorbed and market players begin to take position again.

The real estate services company said demand for homes will continue to be underpinned by the 4-6% economic expansion seen for 2011, the substantial amount of liquidity floating in the market, the low interest rate environment and ease of credit, and the sustained inflow of hot money expected from the West and possible continued diversion of funds from the Greater China region into the Singapore property market.

“Nevertheless, with market players limited mainly to genuine home buyers and cash-rich mid- to long-term investors as a result of the latest set of cooling measures, developers’ sales for 2011 should slide from 2010’s high of over 16,000 units to in the region of 10,000 units,” Tay Huey Ying, Colliers International’s Director of Research and Advisory said.

Ying, noted, however, that healthy sales volume will likely be achieved on the back of a steadier price growth environment forecast to range between 5% and 8% for 2011, down from 2010’s preliminary estimate of 17.6%.

“The easing of market exuberance amid sizeable supply given the bumper crop of State land sales in 2010 should reduce upward pressure on price and may even result in the softening of prices for mass-market properties,” Ying said.