Demand for mass market homes 'to be stable'

Straits Times: Mon, Dec 19

BUYERS may be reeling from the tough property measures announced earlier this month but analysts at property consultancy CBRE do not expect this to last long. They say in a report that demand for mass market homes will be unaffected although prices could fall 5per cent to 10 per cent. The report stressed that the measures are largely targeted at foreign buyers, a group that is not prominent in the mass market property segment. Data from the Urban Redevelopment Authority shows that locals dominate the private home purchases in the suburbs where mass market homes are located. Singaporeans accounted for 69.9 per cent of caveats lodged for homes outside the central region, while foreigners took up a 14.4 per cent share, it said. Foreigners were more active in the city centre and city fringe districts, accounting for 28.7 per cent and 20.2 per cent of the caveats lodged in those areas. The report also suggested that the various property measures introduced since September 2009 have failed to dampen new home sales. It added that the market has been supported by mass market and upgrader-type homes. CBRE's executive director for residential services Joseph Tan said the measures were introduced to counter the excessive inflows of foreign liquidity. He said the new measures are unlikely to be permanent due to the nature of Singapore's open economy. Still, foreigners who had been thinking of buying a home here are probably having second thoughts in the light of the added stamp duty, he said. Under the new measures, foreign buyers will have to pay an extra 10 per cent on top of the existing buyer's stamp duty of about 3 per cent. The impact would be felt the most in prime and luxury residential properties with prices expected to fall between 10per cent and 15 per cent next year, said Mr Tan. 'Mass market homes could fall by 5 to 10 per cent. Separately, landed home prices will likely see a smaller correction of less than 5 per cent, since foreigners are generally not allowed to buy and supply is limited.' Some developers of properties in the prime districts are already trying to woo buyers back to the market by offering discounts. Agents marketing the Verv at River Valley said the developer is shaving 10 per cent off the prices of its remaining apartments. A 1,010 sq ft apartment now costs $2.25 million. At Loft at Nathan, another River Valley project, a 1,980 sq ft penthouse that would previously cost about $1.8 million now costs about $1.7 million. Both projects are not new launches. The Straits Times understands that the two offers were made in response to the recent measures. Mr Donald Han, vice-chairman of Cushman & Wakefield, said: 'Developers are definitely watching the market now. They will probably re-assess the sector again towards the end of January, and perhaps we might see more offers then.' Source: The Straits Times