Benchmarking elevates private homes resale prices

Primary and secondary home sales rebounded after February as the market took the January cooling measures in its stride. With many new launches creating buying interest, banks offering low mortgage rates and prices continuing to rise, this led to buyers going back to the market in the fear of prices rising further.

Primary home sales averaged 1,690 units per month in April and May, more than the monthly average of 1,234 units in Q1 2011. It is also higher than the monthly average sales of 1,298 units in January and March, if the low effect in February is excluded.

In the secondary market, an average of 1,605 units per month was sold on the resale market in April and May, also higher than the monthly average of 1,383 resale transactions in Q1 2011 but lower than the monthly average of 1700 units in January and March. Secondary sales are based on caveats lodged which is voluntary and can be delayed. Hence, the monthly average in April and May could be higher when more caveats are lodged later.

The market was less active in June, due in part to the school holidays and also due to expectations of policy reviews that will affect the housing market following the General Election. With more caution in the market and as price resistance increases, the pace of price increase is likely to moderate for the rest of the year. Nevertheless, buyer interest is expected to be sustained by upcoming launches and the low interest rates, barring any government intervention which may dampen demand significantly.