{"id":29860,"date":"2019-09-30T18:12:34","date_gmt":"2019-09-30T10:12:34","guid":{"rendered":"https:\/\/www.99.co\/blog\/singapore\/?p=29860"},"modified":"2022-06-13T17:24:12","modified_gmt":"2022-06-13T09:24:12","slug":"have-effects-of-the-cooling-measures-worn-off","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/have-effects-of-the-cooling-measures-worn-off\/","title":{"rendered":"Have Effects Of The Cooling Measures Worn Off?"},"content":{"rendered":"
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The uptick in pricing index and greater uptake of new homes in August have raised questions on whether effects from last year’s property cooling measures have worn off.<\/strong><\/p>\n

On July 5, 2018 just slightly after 7pm, the Government dropped the surprise announcement that it was raising Additional Buyer\u2019s Stamp Duty (ABSD) rates and tightening Loan-To-Value (LTV)<\/a> limits to curb \u2018excessive exuberance\u2019 in the residential property market. The cooling measures<\/a> took effect the next day, arriving just as property developers replenished their land banks throughout 2017 and into 1H2018.<\/span><\/p>\n

Effects of the measures were felt almost immediately, turning the tide of soaring home prices over the next quarter following its implementation. Total sales volume for private residential properties also fell by almost half over the next 12 months.\u00a0<\/span><\/p>\n

In spite of that, home prices remained relatively stable, with the price index rising at 0.5% over the last two quarters of 2018, and registering just a slight decline in 1Q2019.\u00a0<\/span><\/p>\n

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But prices rose unexpectedly to a 5-year high in 2Q2019<\/b><\/h2>\n
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Singapore Price Index. Source: URA, 99.co<\/figcaption><\/figure>\n

In a surprise turn of events, private home prices rose by 2 percent in the second quarter of the year. The rise did not only catch market observers by surprise, it also effectively erased the price declines that had set in post cooling measures after 3Q2018.\u00a0<\/span><\/p>\n

Based on data from the Urban Redevelopment Authority (URA), the private property price index for 2Q2019 was also the <\/span>highest since 1Q2014<\/span><\/a>. While some analysts call the price rise an anomaly that is attributed to the new benchmark pricing achieved at <\/span>new launches<\/span><\/a>, others believe it demonstrates the resilience of the country\u2019s real estate sector.<\/span><\/p>\n

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New private home sales held steady even during the Hungry Ghost Month<\/b><\/h2>\n

While market activity tends to slow during the <\/span>Hungry Ghost month<\/span><\/a>, sales volume for private homes appeared to have held strong in August as developers sold over 1,000 new homes.\u00a0<\/span><\/p>\n

According to URA, over 1,122 new private homes were sold in August 2019, down from 1,179 units in July (excluding Executive Condominiums). While there is a slight decrease in the number of transactions, the sales volume for the month of August is still considered robust as it is almost on par with sales in the month of July – which typically records higher than average monthly sales in a year.\u00a0<\/span><\/p>\n

The uptick in pricing index and greater uptake of new homes in August have raised questions on whether effects from 2018’s property cooling measures have worn off. While we think that the cooling measures have achieved just what they were put in place for – that is, to stabilise the overheating property market – we observe that the private residential segment is starting to regain momentum, and this could be due to the following reasons:<\/p>\n