As a result of cooling measures, the price rise in the private home sector slows down
According to the estimates released by the Urban Redevelopment Authority, or URA, the prices of private homes barely managed to rise a 0.5% in the period between July and September, in comparison with the latest three-month period. This more than obvious slowing down of price increases is due to the fact that the authorities of Singapore introduced a set of cooling measures back in July, this year. Considering that the second quarter brought rises of 3.4% in this sector and that the first quarter recorded rises of 3.9% the slowing down in the third quarter is noticeable.
If we are to look at the property price index offered by the URA, the prices of homes on the private property market increased with 8.8% every year. But, the first 9 months of 2018 brought in an increased of only 7.9%, a lower value considering that there was a 9% increase in the second quarter alone. Both the non-landed and landed homes lost their rise in price value as a result of all these. Thus, in comparison with the quarter that just past, when the increased was of 3.2%, the present quarter recorded an increase of only 0.2%. In the case of landed properties, the increase is more significant, with 1.7%, but yet much lower than the 4.1% brought in by the second quarter.
Desmond Sim, who is the head of research for Singapore at CBRE, stated that the slowing down in price increases is something significant these days. But, he also added that in spite the fact that prices grew in a very small proportion, it is still expected for land costs to increase in the quarters that are about to follow. Also, Ismail Gafoor, the chief executive of PropNex Realty, added that it is expected for the prices of private properties to reach an increase of 8 to 9% until the end of the year. He is also positive when looking into the future, as he doesn’t expect for property prices to go very low, in spite of the fact that developers have to face land bid costs that are rather high.
Besides all these, everything became more rigid in Singapore when it comes to buying a property. In the summer of this year, the buyer’s stamp duty suffered a modification, increasing its value with 5% for all homebuyers looking to purchase a second or third property. Also, the loan-to-value was raised as well with 5% for loans offered with the purpose of buying a property. While some don’t like the sight of all these changes, we all need to be able to look into the future and understand that all these measures are made to protect the property market and economy of Singapore. Eugene Lim, the key executive officer of ERA Realty, stated that the intention of the Government of Singapore is not to stop the prices of property from growing. The goal of these measures is to make the prices grow at a steady rate, instead of rampaging uncontrollably and creating destabilizations that will be harder to correct later on.
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