While residential prices can be expected to moderate in the fourth quarter (Q4), they are unlikely to dip in the next 12 months.
According to Donald Han, special adviser at HSR Property Group, prices of resale housing board (HDB) flats could inch up by 0.5 per cent in Q4 and private non-landed home prices are likely to see a marginal 0-0.5 per cent increase.
This is in comparison with the expectation that HDB resale prices would increase by 2-2.5 per cent and private non-landed homes would increase 0.8 per cent quarter-on-quarter, before the latest cooling measures were announced, said Mr Han.
That being said, prices are unlikely to fall, given the low interest rate environment and the fact that the market is flush with liquidity.
"We think the underlying support for the residential market is still the low interest rate environment, which will ensure market activity over the next 12 months.
Prior to this, we would have expected the party to come to a standstill middle of next year, but (this has changed) with the US Federal Reserve pledging to maintain Fed funds rate near zero at least through 2015," said Mr Han.
"Interest rate alone is what's going to drive the market because the money has to be parked somewhere," he said.
Despite this, the latest set of measures, which include a 35-year cap implemented on loan tenures alongside tighter loan-to-value (LTV) ratios, may result in moderated sales takeup.
Some buyers may be priced out of the market because of the cap on loan tenures which results in higher monthly instalments, although this will be a negligible number, said Mr Han.
The bigger impact will come from buyers who postpone their purchasing decisions in the expectation that the market will correct itself.
"If you're looking for the kind of responses we got at (property) launches in August, we're probably not going to see that," said Mr Han. "People are probably going to wait at the sidelines to see what transpires. But I think you'll still see showflats being well patronised. It's just that people might take a little longer to make a decision."
Another potential impact of the measures is that HDB upgraders who previously may have held on to their flats for investment purposes would now have to let go of their HDB flats, said Mr Han.
"Potentially, people may say I have to sell (my HDB flat) because I still want to upgrade. So that helps to open the door slightly for more resale units to be offered."
Mr Han was speaking at the sidelines of the fourth national Real Estate Congress, which was jointly organised by FIABCI (Singapore Chapter), the Singapore Accredited Estate Agencies Limited and Singapore Institute of Surveyors and Valuers.
Gracing the event was Acting Minister for Manpower and Senior Minister of State for National Development, Tan Chuan-Jin.