Non-landed private resale prices stalled by loan rules

PHOTO: Non-landed private resale prices stalled by loan rules

SINGAPORE - Prices of non-landed private homes on the resale market stayed mostly flat last month as a new loan framework to curb excessive borrowing began to bite.

Such prices rose just 0.1 per cent islandwide in July from a month earlier, according to figures released yesterday by the Singapore Real Estate Exchange (SRX).

Analysts attributed the marked slowdown from June's 0.8 per cent rise to new rules by the Monetary Authority of Singapore (MAS) introduced at the end of June to restrict home loans to overstretched borrowers such that their total monthly debt repayments do not exceed 60 per cent of gross monthly income.

"Investors will be more careful as they have to take into account all the rules before buying a property," said Mr Eugene Lim, ERA Realty's key executive officer.

The city centre saw the biggest decline, dragging the overall figure lower - prices of resale non-landed private homes there fell by 0.5 per cent.

In the suburban areas, resale prices fell 0.4 per cent , according to the SRX data.

In contrast, resale prices in the city-fringe areas rose by 1.2 per cent.

R'ST Research director Ong Kah Seng noted that buying interest for completed homes in the city centre remains weak given that buyers can also choose from the large supply of unsold new homes in the area.

Buyers are also keener on smaller units under 1,000 sq ft in the city centre as these homes are typically the newer units and can be easily rented to expatriates with reduced housing allowances, Mr Ong noted.

But the supply of such units is limited on the resale market as the bulk of older properties in the city centre tend to be spacious luxury properties, he said.

As for resale volume, the suburbs saw total transactions of only 269 last month as buyers were attracted to new launches in those regions, industry experts noted.

"Buyers are more interested in new sales as they are newer, and they are also buying (new homes) for investment and capital appreciation, said Mr Lim.

He added that an estimated 16,742 private homes are projected to receive their temporary occupation permit this year, which will slow down demand for private resale homes.

"Sales volume of (resale homes) is therefore expected to decline moderately in the following quarters," Mr Lim said.

On the rental front, rents of non-landed private homes increased 0.2 per cent last month, reversing the 0.1 per cent dip in June, according to the SRX data.

The increase was led by rents in the city centre, which climbed 1.4 per cent.

In the city fringe area, rents declined 0.9 per cent, while rents in the suburbs fell 0.4 per cent.

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