Homes bound to be 20% cheaper due to latest round of cooling measures

Buyers are seen to adopt a "wait and see" attitude for the market's response to the latest set of government measures announces January 13.

In a statement, Phillip Securities said it expects genuine home buyers to resume their buying momentum in “2 to 3 months time” as the measures safeguard against speculative buying in the property market.

Despite the early price fluctuations in the residential homes sector, the securities company believes there is still a healthy demand for houses due to positive economy growth in Singapore.

“Home prices may trend sideways in 2011 for that reason but likely to drop in 2012 onwards due to supply-side pressures,” it said.

Despite the government’s numerous attempts to cool home prices in 2010, private home prices experienced strong growth overall. Private home prices increased 2.7% q-q in 4Q2010 and 17.6% for the year.

Landed property seen the strongest growth with 5.5% q-q in 4Q2010 and 30.8% in the whole year. Non-landed private property seen growth moderated with 1.8% q-q in 4Q2010 and 14% for the whole year.

Home sales: 2010 marks a record year since 2008 with the number of primary property sales totaling 16,581 units (ex. Executive Condominiums) compared to 14,991 units in 2009. Buying sentiments subsided after each round of cooling measures announcement but revived after a month or two.

4Q2010 statistics from the Urban Redevelopment Authority (URA) show that prices of private residential properties increased by 2.7% q-q to 194.8, a fifth consecutive month of slow down in growth rate. For the whole 2010, prices increased by 17.6% compared to 2009.

Although pace of growth has been moderated, it remains at the record high level since 2Q1996. Landed property segment recorded strong growth of 5.5% q-q and 30.8% y-y to 212.9 point. In the non-landed private residential segment, prices increased by 1.8% q-q and 14% y-y to 189.7 point.

Among the non-landed private residential, properties in the core central region (CCR) experienced a slightly stronger growth of 2.2% q-q in 4Q2010, compared to 1.6% q-q in previous quarter.

Growth rates continued to moderate in rest of central region (RCR) and outside central region (OCR) at 1.9% q-q and 2.1% respectively, compared to 2.3% and 2.2% in last quarter. For the whole 2010, non-landed property prices in CCR, RCR and OCR increased by 14.2%, 17.6% and 15% compared to last year.