Following the most recent round of cooling measures issued by the government in July 2018, Singapore’s property market continued its downward trend until year end. 2018 closed with 5 straight months of decline in real estate resale volumes.
December, which is typically the slowest month of the market year, reflected a 23.9% drop from November in the number of Housing and Development Board (HDB) flats resales. The year ended on an overall drop which superseded the 20.1 percent fall of 2017.
Singapore’s governing authorities have been passing cooling measures now and again over the last decade to regulate and keep a check on the country’s property market. Regular investors and new buyers are both always on the watch for sudden regulatory measures when it comes to buying and selling property in Singapore. Despite this, the July measures were introduced rather unexpectedly and they have been able to produce great results in curbing the spiralling growth of the property market.
Part of the reason for the decline in the resale market in the last year is the restrictions placed on loan limits by the government in July. The new measures also highly affect the depreciating value of older units on the market. In addition, most buyers and sellers go on vacation in this season. Even so, the sales this December were by far much lower than the average sales generated in December the previous year. Only 1434 flats were resold in December 2018. By comparison, the HBD had recorded a sale of 1,587 units in December 2017.
Moreover, the third quarter of 2017 saw a wave on en-bloc sales that heavily drove investors to the property market.
The July 2018 cooling measures came as a huge shock to many developers, shareholders, property investors who were looking to make investments in en bloc deals .These measures not only scrambled up the estimated investment costs, they also took the attractiveness of the property market out for the everyday buyer to a large extent. There was no urgency or incentive to invest in flats thereafter.
The decline in demands continued despite a decrease in HDB resale prices. The prices had dropped by 0.3 percent in comparison to November rates.
Although the overall resale price index of HDB has been continually registering a steady fall since July, the fall has not been uniform across segments. The market for relatively larger units like four to five bedroom flats continued to get buyers who were willing to pay the premium demanded by the market trends. This is despite the fact that the premium is currently at an over market value rate.
In comparison there has been a dip in buyers for executive and one to three bedroom flats. The sales of flats have also garnered different results in different districts. Sengkang and Punggol for instance, have already reached their minimum occupation period and are beginning their resale phase.
Most flats in these areas have sold for good prices. Part of this could be attributed to the fact that these are completely new flats and have been well-designed with the latest state of art facilities at affordable rates. That the government is trying to build the areas up as digital districts may also have influenced buyers’ choices of investment in these areas.
In addition, it has been noted that the prices of flats in non-mature estates have registered an increase of 0.2 percent in December. In contrast, flats in mature estates have recorded a dip by 1 percent.
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