Property fever: Band-Aid not the cure

Property fever: Band-Aid not the cure

SINGAPORE - January blew cold air on the red-hot property market - but this latest, seventh round of measures to cool the market led to an unusual anomaly.

In the six previous rounds of cooling measures from September 2009, which slapped on additional stamp duty for buyers and tightened loan restrictions, home sales dipped immediately after each round. Some buyers even forfeited options to buy, in anticipation of price falls.

After Round 6, for example, volumes of new home sales fell 26 per cent last October from the month before.

After Round 5, sales volumes fell 66 per cent in December 2011 compared with November's sales.

But in January, after Round 7, the property market rebounded despite the introduction of tighter loan limits and a hike in the additional buyer's stamp duty (ABSD).

New private home sales were up 43 per cent in January from December, propelling home sales to more than 2,000 units. This was in part due to buyers rushing to beat the clock before the measures kicked in on Jan 12. Last year, the monthly average was 1,858 units in a record year with 22,290 new homes sold.

In February, sales figures slowed to fewer than 800 units on the back of a Chinese New Year lull and a dearth of new launches. Last month, however, they looked set to go up to more than 2,000 units again, with strong sales at a string of suburban projects. This has prompted talk of a possible eighth set of curbs.

What accounts for the uptick in home sales this time round?

Are the cooling measures ineffective? Or do they signal a more fundamental shift in the behaviour of both home buyers and property investors?

Signs of slowing market

In fact, there are clear signs that the property market is cooling, if you look beyond new home sales volumes.

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