Cooling Measures, Holidays Pull Singapore New Private Home Sales Down 58%

Singapore’s new private home sales dropped by 58 percent in December after cooling measures put in place halfway through the month raised taxes on home purchases, restricted mortgage lending and quickly dampened homebuyer enthusiasm.

Data issued today by Singapore’s URA showed there were 650 new private homes sold in December, excluding hybrid public-private executive “condominiums”, or less than half of the 1,547 that changed hands in November. The December total was also 47 percent lower than the 1,217 new private homes traded in December 2020, indicating that higher stamp duties and tighter lending rules introduced during the month outranked seasonal buying behaviour in driving down sales, according to analysts.

“The new property curbs may have led some buyers to go back to the drawing board and think through their options,” Ismail Gafoor, chief executive at PropNex Realty, said in a note on Monday. “Based on caveats lodged, about 39 percent of December’s new home sales were transacted on or after 16 December, when the new cooling measures came into effect.”

The cooling measures introduced last month in response to 16 straight months of price increases in Singapore’s secondary condo market increased additional buyer’s stamp duty (ABSD) rates for both local and foreign buyers, except for first-time local homeowners, in an attempt to temper spiking housing prices and maintain housing affordability in the city.

2021 Sales Highest in 8 Years

Ever eager to find the bright side of the market, property analysts characterised last month’s sales as unsurprising considering the usual lull experienced during the holiday season, and noted that December’s results still surpassed the 10-year average for the month of 607 units. Meanwhile, there were 69 new executive condos sold last month, which was up nearly 10 percent from the 63 which found buyers in November.

“Another reason for the decline in sales in December was also due to a lower number of units launched,” said Mohan Sandrasegeran, research and content analyst at Ohmyhome “Developers were mindful of the holiday season in December and may have wanted to regroup after the cooling measures were announced abruptly.”

Developers added 383 units to the market last month, or just a little over a quarter of the 1,283 units launched in November. Normanton Park by Chinese developer Kingsford Huray Development and Roxy Pacific’s Mori condo were the top selling projects during December, with 73 and 71 deals closed, respectively.

A larger pool of available units in neighbourhoods outside the main business districts helped these areas lead overall sales last month according to analysts, with new private homes sold in the city’s rest of central region, which includes mid-tier markets Marina South, Queenstown, Fort Canning and Upper Bukit Timah, standing at 292, followed by 224 new homes sold in Singapore’s suburban areas or those outside the central region. In the core central region, where traditional prime markets are located, only 134 deals were closed during the month.

While the overall impact of the government’s cooling measures is expected to become clearer in the coming months, Sandrasegeran said the restrictions may have already deterred some foreign buyers due to the 30 percent ABSD now levied on their purchases, compared to 20 percent previously. He said 83 percent of new home purchases last month were made by Singaporeans while Singapore permanent residents accounted for 12.5 percent, and foreign buyers just 4 percent of the total.

Ready for a Chilly 2022

Despite the sharp decline in December transactions, overall private home sales in Singapore still managed to grow by 31.4 percent to reach 13,118 units in 2021, compared to 9,982 homes sold a year earlier. That total stands as the highest volume of private homes sold since 2013’s 14,948 units.

Following that red-hot 2021 performance and the subsequent government reaction, analysts expect a cool start to the new year.

The first two months of 2022 may see dampened sales and limited developer launches amid the Chinese New Year festivities, said Propnex research and content head Wong Siew Ying, who is projecting a slight rebound in sales thereafter, as more projects enter the market.

Wong said some of the new project launches lined up for this year include local builder Tong Eng Group’s Belgravia Ace, a 107-unit strata-titled, landed development which is scheduled to go on the market this month, as well as Qingjian Realty’s 105-unit The Arden condo in Phoenix Road off of Choa Chu Kang Road.

For Lam Chern Woon, research and consulting head at Edmund Tie, the cooling measures will keep sales low for the first half of the year with hopes for a rebound in the final six months, once there are “clearer bearings ahead.”

“Some buyers may hold back to see if prices would turn more favorable before committing,” he said. “While the cooling measures will dampen sales momentum, the overall market remains supported by a robust labour market, ongoing economic growth, and healthy demand-supply dynamics in the property market.”