Why July's property rebound won't last

Singapore developers sold 1,943 homes but government will ensure any rally fizzles.

"We believe that if sales volumes remain at elevated levels, more cooling measures are likely," said Maybank Kim Eng in a new report.

Based on the latest figures from the Urban Redevelopment Authority, developers turned around in July, reversing two consecutive months of declining sales. With the1,943 new units sold in July, this brought total new home sales to 14,197 units as of the first seven months of the year.

"Barring another round of cooling measures, we now expect new home sales to hit the 20,000-unit mark for the full year, which is a record," said Maybank Kim Eng.

But developers will have a hard time sustaining the sales growth in July even without the intervention from government, the brokerage firm noted. "For the rest of the year, we expect potential homebuyers and investors to stay increasingly on the sidelines, especially when economic confidence continues to wane and serious buyers turning increasingly to the secondary market for better bargains."

"If the buying dries up significantly, the unsold inventory of 80,000 units may pose a problem in future," Maybank Kim Eng added.