A PAPER from the National University of Singapore's Institute of Real Estate Studies (IRES) argues that it is unclear that the seventh instalment of cooling measures announced in January has had the desired impact of mitigating home price inflation.
It based this on an analysis of its Singapore Residential Price Index (SRPI) series, which tracks prices of completed non-landed private homes excluding executive condos.
It found that while earlier policy measures seem to have reduced home price volatility, the magnitude of month-on-month price changes has increased for the overall SRPI since October 2012, driven mainly by price volatility in the Central Region (excluding small units).
Knight Frank chairman Tan Tiong Cheng suggests this could be due to completed homes in Central Region drawing a high proportion of buyers who are investors. "While investment demand was quite badly hit when higher additional buyer's stamp duty rates and lower loan-to-value limits for residential property investors were announced on Jan 11, sentiment picked up again when the government released the Population White Paper and Land Use Plan in late-January, with a population planning parameter of up to 6.9 million by 2030."
IRES defines Central Region as districts 1-4, including the financial district and Sentosa Cove, and the traditional prime residential districts of 9-11.
It plotted the overall SRPI as well as its various subindices, along with total sales volumes of non-landed private homes (in primary and secondary markets combined, excluding ECs) against the policy dates of the seven market-cooling interventions since March 2009, and the "shoebox control measure" unveiled last September.
Following the latest January measure, transaction volumes and prices fell in February but have since recovered with the overall SRPI buoyed by the strength of the housing market in Non-Central Region, IRES argued. Its SRPI for Non-Central Region based on the latest flash estimates for April reflects a 13.5 per cent year-on-year increase, compared with a 3.2 per cent gain for Central Region. Both subindices exclude small units.
However, IRES notes that the price behaviour of its subindex for small units (up to 506 sq ft) islandwide is now more in line with that of the overall market. "Given that the shoebox policy took effect from Nov 4, 2012, and that speculative attention has been diverted elsewhere, small apartments seem to exert less pricing influence (on the overall market) than before," said associate professor Lum Sau Kim of IRES.
On Sept 4 last year, the Urban Redevelopment Authority issued a circular stipulating that from Nov 4, the maximum number of housing units in non-landed private housing projects outside the Central Area would be capped based on an average unit size of 70 square metres.
Flash estimates from IRES yesterday show that the overall SRPI grew 1.9 per cent month-on-month in April, a bigger increase than the 1.1 per cent rise in March. The Central Region subindex climbed 1.3 per cent, less than the 2.8 per cent in March. Prices in Non-Central Region climbed 2.4 per cent after dropping 0.2 per cent in March. Small unit prices rose 1.8 per cent, adding to a 0.8 per cent gain in March.
Year to date, the small unit subindex has posted the biggest increase of 5 per cent, followed by Non-Central Region (3.9 per cent). Prices in Central Region have appreciated 1.6 per cent, while the overall SRPI is up 2.8 per cent.
Giving her take, DTZ's South-east Asia chief operating officer, Ong Choon Fah, says: "Anecdotally, the feeling is that the January 2013 measures are taking bite but slowly, and causing certain changes in buying behaviour. But we have also been surprised by the underlying buying strength. We understand that 50-60 per cent of units sold at some recent launches were taken up by first-time home buyers."
Industry players, however, point out that some of these "first-time" buyers may actually be proxy buyers for those who already own private homes and who want to avoid the cooling measures. An example would be parents who buy properties in the names of their children.