The private residential market is expected to moderate in terms of homebuying sentiments in the second half of 2011 although many homebuyers will remain keen in properties with growth potential. The moderation in homebuyers’ interest will be consequent to record prices which brings along strong risks of correction.
Singapore’s economy grew by a spectacular 8.3% in the first quarter of 2011, signifying that the buoyant economic performance was brought into 2011, albeit at an overall moderated pace. With this, the Ministry of Trade & Industry (MTI) projected 5.0% to 7.0% GDP growth in 2011, up from a previous forecast of 4.0% to 6.0% growth.
The performance of the private residential market in the second quarter of 2011 could be seen as a reflective effect from the drastic government property cooling measures which were implemented in January 2011. This is largely because by the second quarter of 2011, it was at least two months after the measures were effected.
Stakeholders, especially homebuyers, have had some time to digest and carefully evaluate the options and constraints from the measures, reflecting a well-considered home buying decision.
The second quarter of 2011 began with improved developer sales activity. The number of developer sales rose by 24% month-on-month in April 2011, after sliding to a moderate level of 1,200 units to 1,500 units in February and March 2011 respectively. This was due to the immediate aftermath of the implementation of the property cooling measures. Generally, developer sales in excess of 1,000 units but lower than 1,500 units per month denotes that sales activity is overall healthy but not bullish. In May, 1,543 units were sold by developers. However, the strong
developer sales in April and May were partly due to a pent-up demand in February and March, where many homebuyers eventually proceeded with their buying decisions after deliberation and for fear of any further cooling measures. Various projects with innovative concepts were also rolled out, attracting homebuyers on the sidelines which highlighted the potential in the projects.
Developer sales interest was also spilling over to the secondary market, where resale properties became more attractive options for buyers who were priced out of the primary market. Prices of non-landed residential properties continued to rise albeit at a moderated pace, from 1.8% quarter-on-quarter in the first quarter of 2011 to 1.3% quarter-on-quarter in the second quarter of 2011. Prices of luxury, high-end, mid-end and mass-market non-landed private homes increased by 1.4%, 2.0%, 1.6% and 1.3% respectively. The marginal increase, especially for mass-market homes was on the back of strong owner occupation buyers’ demand instead of speculations.
Rents of non-landed residential properties increased by about 3.6% quarter-onquarter in the second quarter of 2011, underpinned by sustained tenant demand especially from expatriates and a laggard recovery over the past 1.5 years.
The private residential market is expected to moderate in terms of homebuying sentiments in the second half of 2011 although many homebuyers will remain keen in properties with growth potential especially those in places with major suburban district rejuvenation plans. The moderation in homebuyers’ interest will be consequent to record prices which brings along strong risks of correction. Should necessary property cooling measures be implemented by the government, prices may be kept in check or fall marginally as homebuying and re-selling are likely to come with even more restrictions.