Despite six rounds of cooling measures in the last couple of years, the private property market continued its uptrend unabated in 2012.
Although data for December is yet to be out, but both sales volume and prices of new private homes have already surpassed previous highs.
In the past two years, the Yaps have bought four private properties, three of which were in 2011.
They hold to the view that property investments are a good hedge against inflation.
But with property prices hitting the roof, the family of four is finding it increasingly difficult to find new investment opportunities.
Prices of private homes have gone up by 3.7 per cent so far this year, according to Savills. And experts expect marginal increases in 2013.
A property investor, Soh Poh Neo, said: “Even if rental is coming down, we still can support the mortgage payment because loan-to-value (LTV) is very much lower so mortgage monthly instalment is also much lower. So yield will be coming down in view of the supply but interest rate is low, so it is not so frightening. I believe that not many people will sell in a crash situation because everyone has good holding power. The latest cooling measures caught people like me being filtered out. Next what am I going to do, I will use my children’s name to buy – they have longer term for the loans.”
The Yaps used their son’s name – 23-year-old Travis Yap – for the latest purchase of a unit at eCo.
Since 6 October, property investors like Madam Soh and her husband Mr Yap, aged above 35, could borrow less from banks to finance their mortgages.
The latest cooling measure, which has also capped loan tenures at 35 years, is the sixth to be implemented in Singapore in the last couple of years.
Experts said more cooling measures may be implemented if home prices do not show signs of easing. But with the current low interest rates and access liquidity in the market, property investors are finding it easy to finance mortgage loans, and this may drive demand and home prices higher going forward.
DTZ’s research head for Asia Pacific, Chua Chor Hoon, said: “The government may be looking at the HDB market, at the rules and regulations over there, because a high proportion of buyers in the private condominium market are people with HDB addresses. So these could be people who are not just upgrading but buying a private condominium for investment purposes.”
To cope with demand, the government has increased the supply of land for new private homes through its Government Land Sales (GLS) Programme.
For the first half of next year, the GLS programme will put up 12 private residential sites including five for executive condominium projects put up for sale. These will yield some 14,035 private and executive condominium units.
But since 2011, the total number of units yielded from the government land supply has been getting less – from 14,300 units for GLS H1 2011 to 14,100 units for GLS H1 2012 and 14,035 units for H1 2013.
Savills Singapore’s research head, Alan Cheong, said: “This year, the high supply numbers and therefore the high demand numbers were a by-product of the very aggressive 2011 government land sales supply. But moving into 2013, you find that the 2012 GLS numbers were much more muted. And these will be launched next year. So next year and corresponding the new home sales numbers would come through at a more sedate pace.”
Knight Frank’s research head, Png Poh Soon, said: “The assessment from our house view is from 16,000 to 18,000 for the whole year. Compared to 2012, which our assessment and forecast is up to 22,000. In terms of price wise, we don’t foresee that in 2013 there will be any quick correction. But on the other hand, we don’t think there will be runaway prices. We foresee that prices will trend upwards but at a slow steady pace.”
Another trend that will see the property market cooling in 2013 – capping the total number of units that can be built on a site for non-landed private residential developments outside the central area from 4 November 2012, reducing the number of investors looking to buy a property that requires less capital.
Chua Chor Hoon said: “Volume will come close to it but won’t surpass because a lot of shoebox units have been sold so we will see larger units.”
Up till November, nearly 21,000 new units have been sold. This have already surpassed the previous record where about 16,000 units were sold for the whole of 2010.
