Massive 50% drop in private property sales incoming: PropNex

Blame it on the new round of cooling measures.

Private property prices will also take a hefty hit, affecting all property owners from Singaporean citizens to permanent residents.

“The hefty ABSD of 5% for PRs for the first property, 7% for Singaporeans’ second property purchase and 15% for foreigners will have a drastic impact on the sales volume of private properties in the coming months. Sales volume is expected to drop by more than 50% as buyers and investors choose to wait-out and see the effects of the dramatic cooling measures," said Mr Mohamed Ismail, Chief Executive Officer of PropNex Realty.

"It is predicted that the private property prices will head towards a slide of 5 to 7%. Developers had already paid high prices for the recent land bids and will not be able to sell much lower. Thus, developers are likely to be holding on to their project sales until the market recovers,” commented Mr Ismail.

"He cautioned that danger lurks if there is a downward spiral effect on the prices. If the private property prices were to see a drop of more than 15%, this may result in Singaporeans, investors and even first-time private residential homeowners having a negative property asset portfolio, especially those who bought their private properties in recent time with only 5% to 10% cash down payment.

“HDB upgraders’ aspirations of owning a private property will face a bigger hurdle with the revised ABSD as one has to fork out additional 7% cash upfront in the purchase of the new launches, even though they could apply for a refund upon TOP. In addition, the 25% down payment will add on to the cash outlay required for the purchase. In order to avoid paying the 7% ABSD, the current owners had to contract to sell their existing apartment before they exercise the option to purchase. More people will end up being homeless during the transition of upgrading to private property. This may also result in most instances where the selling of homes being completed earlier than the buying one with little time left for renovation and shifting in,” remarked Mr Ismail.