Private property prices in the OCR seen to rise 8-9%

Buyers opting for more affordable homes.

According to Mr Mohamed Ismail, CEO of PropNex Realty, market segment remains resilient, well-supported by genuine upgraders. 

He said "as financial institutions put in place the processes of facilitating access to mortgage loans, we are cautiously optimistic that private property prices could rise by 2.5% for the whole year, with OCR properties to rise by up between 8 - 9 %. With more launches expected in the last quarter this year, we expect a healthy demand as long as developers priced them right.”

Here's more from PropNex:

URA’s results also showed that private residential property prices are going on a downward trend especially after the introduction of TDSR in all segments, registering drop in the price index compared to 2Q2013.

Private property prices grew by a tame 0.4% Q-o-Q to 216.3, or half of the growth registered in the previous quarter (In 2Q 2013, growth was 1.0%), mainly contributed by the strong price growth in the Outside Core Region (OCR) at 2.2% increase.

Private properties in both the RCR and CCR bore the brunt of the impact of the successive round of cooling measures as it slipped 0.9% and 0.3% respectively.

With affordability being a key consideration especially after the imposition of the additional measures in January, homebuyers continued to be drawn to the relatively more affordable mass-market homes in the Outer Central Region (OCR).

“The slew of cooling measures had a major impact on the volume of transactions in private property segment as well. Based on the 3Q2013 statistics, there is a drop of at least 40% in transaction volume in the new sale and resale market, mainly attributed by the Total Debt Servicing Ratio (TDSR).”

“The TDSR introduced by MAS with loan interest rates pegged at 3.5% had prompted potential homebuyers to take a more discretionary view of home buying with the reduced affordability levels.

We believe this has reduced the purchasing power of many home buyers and also slowed the purchasing process as loan assessments by banks take a longer time so buyers are unable to commit to purchases as quickly as before.

Demand would have also softened due to the TDSR’s impact especially on buyers who already have other existing mortgages and who are taking a wait-and-see attitude.”

“Private property investors and sellers are hesitant in disposing off their existing properties now as many are subjected to the stringent cooling measures of TDSR and ABSD.

With today’s relatively low interest rates and a positive rental yield, sellers would rather rent out their properties in avoiding the hefty taxes. Thus, the volume of transactions dropped in the 3Q13.”