The Urban Redevelopment Authority (URA), on 1 April, had released the data on rates of private homes in Singapore. It highlighted that the prices increased by 2.9% in the first quarter of 2021 when compared to Q4 of 2020.
Before the real estate curbs were laid in July 2018, the property prices increased by 3.4% in the second quarter of that year. This year’s rise is said to be the sharpest quarterly surge since then.
This estimate has been compiled by analysts based on the stamp duty payment transaction prices given in contracts. It also factors the data obtained from units sold by developers. URA has stated that it will release the exhaustive real estate data for Q1 on 23 April.
Experts indicate that real estate prices are gaining due to cheap mortgages and demand, despite the low-interest percentages.
CBRE estimates that private property rates in Singapore have increased by 6.2% since Q1 2020.
The values of non-landed homes increased by 2.1% in Q1 as per URA estimates. And in the case of landed properties, the price inflated by 5.6%.
Industry experts expect a new round of cooling measures due to the price trends shown by this graph. Moreover, this happens to be the fourth upswing in consecutive quarters.
Brandon Lee, an analyst from Citigroup, believes that there might be an “upside risk” for the estimates when the figures get published later this month.
Goh Jia Ling, manager of Southeast Asian operations, CBRE, says buyers are inclined towards smaller units with increased property prices. She pegs the “sweet spot” of affordability below the S$2 million mark.
Director of Research at Huttons Asia, Lee Sze Teck, says there is a high possibility of cooling measures taking effect as the government intends on keeping the rates affordable.
He also assures that the rise in prices would not affect first-time buyers as historically, such measures have targeted only foreign buyers and investors. Teck also notes that Singapore might be one of the few countries in South East Asia to tax the rich.
DBS analyst Yeo Kee Yan noted that the cooling measures may potentially affect the stocks of APAC Realty Ltd. and UOL Group Ltd. He urges the builders to be cautious while land bidding, given the scepticism of the economy.
Nicholas Mak, ERA’s research and consultancy head, views the introduction of property cooling measures as premature. He explained that the present rise in property rates is relatively lower than Q2 2018 when cooling steps were initiated.
He also believes that the cooling norms would impact the Singapore economy and the construction business. Knight Frank’s Leonard Tay, meanwhile, explained that the likelihood of a stamp duty hike would further dampen demand from foreign homebuyers who are already limited by travel restrictions.
The expected cooling measures may include Additional Buyer’s Stamp Duty (ABSD) for second estate purchase, increased down payment requirement, and lower loan-to-value (LTV) ratio mortgages.
Source: Straits Times
