Singapore homebuyers have shrugged off the latest government attempts to cool down the housing market, with the city-state recording its second-busiest January housing market in the past eight years, according to data released this week.
“It is the highest private home sales for the month of January since 2014, with the exception of January 2021, where sales were largely boosted by the launch of mega development Normanton Park a year ago,” said Wong Siew Ying, research and content head for PropNex Realty.
Data released on Tuesday by the country’s Urban Redevelopment Authority (URA) showed that 673 new private homes were sold last month, excluding the hybrid public-private executive condo category, marking a 3.5 percent increase over the 650 which left developer stocks in December.
With the largest volumes of home purchases coming at mass market projects in suburban areas, the government figures indicated that local buyers are continuing to crowd developer showrooms, despite government regulations announced last month which raise stamp duty and restrict lending conditions.
Suburbs Drive New Home Sales
While last month’s sales of new private homes marked a 59 percent drop from the 1,633 units sold during the same month a year earlier, the year-opening total was still higher than any January from 2014 to 2020, when the market saw from 324 to 620 units change hands, said Christine Sun, senior vice president of research and analytics at OrangeTee & Tie.
The agency analyst noted that the latest January total came despite developers only having launched for sale 178 new homes last month versus 383 units in December.
By region, the increase was mainly due to home buyers snapping up mid-range homes in the suburbs, or outside the central region, where transactions climbed to 275 units in January, which stood as a 23 percent increase from the 224 homes sold in the same locations a month earlier.
In Singapore’s pricier neighbourhoods downtown, December’s cooling measures appear to have hit their target with the number of homes sold in what is referred to in official terms as the core central region (CCR) falling by 19 percent to just 109 units last month, while locations around the fringe of the urban core saw sales volumes slip by one percent to 289 units.
“The sales decline in the CCR in January may be an early indication of the impact of fresh cooling measures – particularly the hike in additional buyer’s stamp duty (ABSD) rates for foreign buyers and investors buying second and subsequent residential properties – possibly crimping foreign buying interest and investment demand,” according to Propnex Research.
Normanton Park, a condo project by Chinese builder Kingsford Development in the West Coast region took Singapore’s home sales crown in January, with buyers picking up 94 units at a median price of $1,841 per square foot. The next most active projects were Tong Eng Group’s Belgravia Ace in Ang Mo Kio and Singapore Press Holdings Woodleigh Residences in District 13, which sold 77 and 34 new homes respectively.
Softer Impact Seen
Although a number of developers have complained of potential negative side-effects on the market from the cooling measures implemented on 16 December, this latest round of government restrictions appears to have been less severe in its impact than earlier interventions.
OrangeTee’s Sun noted that new home sales plunged by 64 percent when stamp duty was hiked in August 2018, with just 617 homes sold that month compared to 1,724 in July,
In 2013, when the government rolled out an earlier set of market restrictions, home sales volume dropped by 65 percent in the first month that the measures were introduced, Sun said.
With the market largely undented by the government’s most recent assault, PropNex’s Wong expects new home sales to remain stable in the next few months, while adding that the limited number of new project launches in the 2022 pipeline will prevent any major increase in sales.
Resale Prices Up
While new home sales continued to exceed average levels, the cooling measures introduced in mid-December appear to have had a stronger impact on the city’s resale market, where sales of second-hand condos fell to 1,118 units last month, which was down by 23.8 percent from December’s tally, according to the latest home price index by 99.co and SRX Property, which was also released on Tuesday.
Ying Khuan Pow, head of research for 99.co, attributed the dip in second-hand condo sales to the newly implemented cooling measures deterring local investors and foreign buyers, with the regulations placing higher taxes on investments in additional homes and on purchases by non-Singaporeans.
In the new home realm, particularly in the mass market segment, most buyers were either first-time homeowners, who are exempt from the recent increase in stamp duty, or were local investors who are subject to lower purchase taxes under the new rules than buyers from overseas, Pow explained.
Despite the drop in sales, however, prices of second-hand condominium units continued to climb in January for the 18th consecutive month, with the SRX Index of home prices rising by 0.4 percent from December, while prices jumped 9.2 percent from a year ago by the same measure.
“Unless there is a housing market bubble where condos are overvalued and homeowners have little equity, distressed selling would happen but this is not the case in Singapore,” Pow said. “With a healthy balance sheet and a strong economic environment, a significant portion of sellers, in fact, ‘don’t need to sell’ so they could choose to withdraw their listings or postpone their plan to sell rather than sell at lower prices.”
The index of second-hand condo prices inched up across the city-state, with locations in suburban areas recording the highest monthly uptick at 0.5 percent in January. Prices in the core central region climbed by 0.3 percent and were up by 0.1 percent in the rest of the central region.
Year on year, prices continued to rise in all three regions, with the index spiking by 10 percent in areas outside the central region, climbing by 9.7 percent in the traditional business districts and rising by 7.5 percent in the city fringe.
Pow predicts that condo resale prices will continue rising this year, but adds that the pace of increase is likely to have been dampened by the December cooling measures.