Warm December private home sales herald cooling market

PropNex believes the record-breaking 1,699 private homes transactions recorded during the Christmas season might have urged the government to announce further cooling measures this month.

The figures represent the highest number of transactions in December for the last few years and the fourth highest monthly sales for 2010.

“We normally see a dip in the number of transactions at the year-end” said PropNex CEO Mohamed Ismail, adding, “[It] is probably this surprisingly hot 4Q10 that has prompted the Government to announce further cooling measures on 13 January 2011.”

Ismail noted, however that the full impact of these cooling measures, which include an extended holding period for the Seller’s Stamp Duty and a lower Loan-To-Value limit, will only be seen clearly after 1Q11.

In December, the market for private properties was still very bullish, with one of the top-four selling projects, Robinson Suites, selling 157 units at a median $2,941psf. Together with the other three top-selling projects, Privé (326 units), The Tennery (220 units) and D’Leedon (180 units), these four projects alone accounted for 883 units sold last month, or 52% of the total.

To illustrate the drastic jump in sales, Ismail noted that the previous three Decembers (2007–2009) only saw a marginally higher 940 units sold altogether.

December’s sales volume brings the total for the year to a new record of 17,638 units sold in 2010, representing a 19% increase from 2009, despite the many cooling measures announced.

Ismail believes that December’s remarkably large number is due to demand from those homeowners who have now decided to enter the market after observing August’s cooling measures, as well as investors who were anticipating steadily climbing prices.

The CEO added that the buyers were riding the momentum of Singapore’s improving economy and the prevailing cheap mortgage interest rates.

Such high sales volume, however,  is not expected to continue for January and February 2011.

“In addition to the New Year and Lunar New Year breaks,” Ismail said, adding, “the unexpected announcement of further, more inhibitive cooling measures on 13 January will cause many potential buyers to adopt a wait-and-see attitude.

The increased Seller’s Stamp Duty of up to 16% will dissuade all buyers who are not prepared to buy with a medium- to long-term view. As such, we can expect to see about 1,000 units sold in January and much less than 1,000 units per month for February and March 2011," he said.