It's a success: Property demand carnage effectively carried out by cooling measures

Even budgets of buyers were slashed.

The government can practically start throwing a party and popping the champagne now as the recent home sales reveal that the cooling measures have effectively curbed purchasing demand across all homebuyers. As a bonus, even the home purchasing power of potential buyers were also cut.

According to P&N Holdings, the various Government measures have effectively curtailed demand from all groups of homebuyers. Not only have selected groups of buyers been side-lined by financing rules under the TDSR, the home-buying budgets of eligible buyers have also been trimmed. 

Here's more from P&N Holdings:

Additionally, demand from upgraders from the Housing and Development Board (HDB) market has also been affected by the softening resale prices of HDB flats which are expected to continue on a downtrend.

Ultimately, what matters in the current challenging environment is price — both on a psf and absolute basis. While selected projects which are reasonably priced and well located will continue to attract homebuyers, prices are expected to come under some pressure as the potential pool of buyers shrink and developers face stronger competition for consumer dollars.

This could be exacerbated by the sizeable residential supply that is expected to come on-stream, turning the market in favour of homebuyers. The general expectations among buyers for a price correction are also likely to keep prices in check.

With tightened loan policies, buyers will remain more discerning and developers have to respond accordingly or risk having a poor take-up rate. Developers need to be more sensitive to the market where value for money is key for most buyers. With the TDSR still in enforcement, it is crucial for developers to price their projects optimally, in order to achieve strong sales. Developers will also likely deploy more aggressive marketing strategies.

CEO of PropNex, Mr Mohd Ismail concluded, “we expect sales performance in the subsequent months of 2014 to hover between an average of about 900 to 1,000 units per month. Private home sales in 2Q14 will likely improve by over 50% to about 3,000 units in total as market interest gradually returns with anticipation of developers' attractive offerings”.

“For the whole of 2014, we envisage that sales volume will be between 11,000 to 12,000 units in all. This is about 20% shy of the 15,000 units in 2013”.