Why property developers are more scared of cooling measures than buyers

Thankfully, they won't raise prices aggressively.

According to Savills, the banking crisis in Cyprus signalled that the eurozone  crisis is far from over and could sporadically flare up and affect global confidence. The subdued macro economic environment in the west, as well as new property curbs are expected to put a rein on overseas buyers, which in turn would dampen prices in the luxury segment. 

Mass-market homes will continue to lead price increases this year, supported by demand from local buyers. The prospect of new cooling measures and forewarnings from the population white paper that the headcount here is set to increase, could have motivated local buyers to bring forward their purchases out of fear of being priced out in future.

Here's more from Savills:

It also appears that the slew of cooling measures have so far been more feared by developers than by buyers. Given this asymmetric behaviour, developers will likely not raise prices too aggressively out of concerns that they might trigger the authorities to introduce another round of cooling measures.

Prices are therefore likely to rise at general infl ationary rates this year. On the leasing front, an increasing supply of luxury units should continue to weigh down rents in this segment.

At the end of last year, the number of unsold units in the CCR constituted 18% of the total stock in the submarket. The proportion was lower in the OCR at 12%. The performance of the leasing market, on the other hand, is not uniform.

Smaller units in both prime and suburban areas could still enjoy rental upside in the short term as more overseas tenants have smaller rental allowances these days with businesses becoming increasingly cost conscious.

However, a potential supply onslaught could clip growth over a longer time period.