Heedfulness cited sales volume and prices as indicators of

Heedfulness in the
Singapore housing market


Prices are up again in the
private housing market, but both demand and supply are moving with caution.

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By Lee Hui Ying, Edited by Joelyn Chan


Housing prices in Singapore are finally on
the mend.


private housing market seems to be rising out of the doldrums. Sales volumes
began climbing in the first quarter of 2016, and prices are now on the rise as


January 26, the Urban Redevelopment Authority posted a general
1.1% increasein prices for 2017. This bucks the downward trend that has plagued
the market for 15 quarters since 2013. This period saw prices fall 12%, but
a reversal seems likely this year. American bank Morgan Stanley forecasts a 10%
hike in property prices by the end of 2018. Other analysts are more
circumspect with their projections, with estimates ranging from 3%. Still, the
general sentiment is that the private property market is on the road to


Song leads Singapore research at Colliers International. She cited sales volume
and prices as indicators of a strengthening property market. “It should
continue to recover this year in view of a steady pipeline of upcoming projects
and positive market sentiment,” she said.


The Straits Times)


Both demand and supply factors have a hand
in this.


and income growth has stirred pent-up demand. Also, indications that property
prices are bottoming out are strong pull factors. A belief in long-term capital
appreciation is prevalent among potential home owners. Many buyers are thus
keen to snap houses up while they are still cheaper.


the same time, the government continues to regulate land provision. It keeps
land supply on a tight leash through the Government Land Sales Programme.

Developers are desperate to get their hands on more land so that they can cash
in on improving sales. This is all the more so given that their unsold
inventory is reaching all-time lows. As such, land-starved developers have
resorted to collective home sales. This has sparked off an ongoing en bloc
fever, the first since 2007. The The 15
deals concluded so far are worth a whopping S$5 billion, dwarfing 2016’s
totals of $1.2 billion. In this year alone, three
sites in Clementi, Upper Bukit Timah and Farrer Road went for $1.04
billion. High prices seem likelier as developers fork out more and more for
prime sites.


such, pent-up demand is outpacing tight supply. Analysts thus expect an upward
price trajectory after a 3-year journey down a trough.


The market is heating up as the government
scales back cooling measures.


policy moves have had the same impact as these economic forces. In March 2017,
the Ministry of Finance, Ministry of National Development and the Monetary
Authority of Singapore laid out in a
joint statement “calibrated adjustments” to the seller’s stamp duties (SSD)
and total debt servicing ratio (TDSR) framework.


changes will not push prices up, but they have served to fuel improving sentiments.

The move was well-received, with property developers benefiting from a stock
market rally. Home buyers who had been waiting on the sidelines also jumped
into the market. This was especially so with the relaxation of TDSR, which has
constrained demand.


Yet, there is still caution in the


government has been careful to emphasise that a wholesale withdrawal is not on
the cards. For instance, it did not change other important restrictions, such
as the additional buyers’ stamp duty (ABSD) and loan-to-valuation (LTV) limits.


Menon, managing director of the Monetary Authority of Singapore (MAS), asserts
that these limits are still necessary. He warned that further easing would
“send a wrong signal” in the regional property markets. Elsewhere, governments
are clamping down on exuberance in their own property sectors. Already,
properties in Singapore are relatively
cheaper, making them more attractive to investors. A broad-based relaxation
would result in capital swooping in on Singapore’s properties. The government
wants to avoid this, as it would likely spark a renewed hike in housing prices.


the government prefers to wait and see. Any commitment to scaling back the
market curbs might be premature and careless.


Other stakeholders are also wary.


buyers and developers seem to share this approach. The former remain
price-sensitive despite the partial relaxation of cooling measures. This is
especially so given the government’s aversion to further adjustments.


is the en bloc bull run a definite indicator of an impending property bubble.

Developers are now expected to build and sell units within a period of 5 years
to avoid ABSD. As such, demand for large sites is cooling as developers prefer
smaller parcels of land. Higher
development charges also provide an extra retardant on the en bloc rush.


the private property sector is tracking Budget developments. There have been
reports that MAS might act on its warnings of “excessive exuberance” in en bloc
sales. Thus, the upcoming Budget statement this February have kept developers
on their toes.


all the players in the private property market are waiting… and watching. It
seems to have turned a corner, but no one will be resting on their laurels.