Cooling measures bite

05:55 AM Oct 02, 2010
by Joanne Chan and Georgina Joseph

SINGAPORE - The measures announced at the end of August to cool the property market are starting to have an effect, even as prices of both public and private housing hit new highs in the third quarter.

Preliminary estimates released on Friday by the Urban Redevelopment Authority (URA) showed private home prices rose by 3.1 per cent in the third quarter to push its index to a high of 190, but the gain was down from a 5.3-per-cent increase seen in the previous three months.

Meanwhile, the Housing and Development Board (HDB) said prices of HDB resale flats increased 4 per cent, marking a sixth straight quarter of gains.

Analysts said that the slowdown in the pace of price increase for private homes occurred despite the URA flash estimate being based on the first 10 weeks of the quarter and therefore did not capture the full impact of the cooling measures.

Agents told MediaCorp sales transactions of private homes dipped by 10 to 20 per cent last month as both buyers and sellers retreated to the sidelines to assess the implications of the Government's announcement.

Analysts said that the fourth quarter would be a better gauge of the impact of the cooling measures and they already expect the rise in private home prices to drop below 3 per cent.

Mr Chua Yang Liang, head of research, South-east Asia at Jones Lang LaSalle, said: "Without the policy, we estimated that possibly we would close the year at maybe 16 or possibly 18 per cent higher.

"But now with the policy, we are likely to rein in growth to a more sustainable level of 2- to 3-per-cent on-quarter growth, so we should see the full year coming in at about 15- to 16-per-cent."

In the public housing market, resale transactions volume last month declined by about 25 per cent compared to August, according to the HDB.

Meanwhile, agents told MediaCorp that cash-over-valuation (COV) premiums fell between 15 and 20 per cent last month.

Mr Eugene Lim, associate director at ERA, said: "In August, our transactions show that median COV reached $35,000, up almost 17 per cent from HDB's median of $30,000 for Q2.

"Last month, it fell to $28,000, down by 20 per cent.

"We expect the median COV to fall to about $10,000 to $15,000 by year-end."

Under the Aug 30 curbs - the third set in 12 months - buyers of non-subsidised HDB flats are not allowed to concurrently own an HDB flat and a private home within the minimum occupation period, now raised to five years.

And buyers with more than one mortgage can only borrow up to 70 per cent of a property's value, versus 80 per cent previously, and must pay 10 per cent in cash, up from 5 per cent.

A seller's stamp duty will also be payable if the property is sold within three years of purchase, up from one year

Source: http://www.todayonline.com