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Singapore : Demand to continue to be project-specific - Q4 2013

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Singapore : Demand to continue to be project-specific - Q4 2013

In 2013, buying activity in the residential property market was weaker than 2012, especially in H2 2013, after the implementation of the Total Debt Servicing Ratio (TDSR) framework in end June. The TDSR exacerbated the effect of the earlier cooling measures in January which introduced a higher Additional Buyer’s Stamp Duty (ABSD) and tighter financing conditions.

Transactions of private homes declined by close to 40% year-on-year (y-o-y) in 2013 - transactions were about 40% lower in H2 than in H1. Quarterly sales in 2013 averaged 5,400 units, compared to the quarterly average of between 8,000 and 9,400 units in the years 2010 to 2012. This y-o-y decline was seen in both primary and secondary sales, although secondary sales fell by a larger 50.5% to 7,755 units, a record low since 2004.

Private home purchases declined across all buyer groups in 2013, but foreign purchases fell by a smaller extent compared to purchases by Singaporeans and Singapore Permanent Residents (PRs). Correspondingly, the foreign share of purchases of private homes crept back up to 9% in 2013, compared to 6% in 2012 after the ABSD was first introduced. This was, however, still below their share of 18% in pre-ABSD 2011.

Transactions of shoebox units in 2013 fell y-o-y for the first time since 2009. Despite this y-o-y fall, the share of shoebox purchases by buyers with public housing (HDB) addresses increased from 60% in 2012 to 62% in 2013. For the whole of 2013, a record proportion of 13.3% of all private home purchases by HDB addressees were shoebox units.

With the permanent TDSR framework in place, transaction volume of private residential properties will continue to remain weak. Following on from H2 2013, it will continue to be more of a buyers’ market in 2014, with purchaser demand becoming increasingly project-specific and price-resistant. Iconic projects or projects with a comparatively lower price quantum are, however, likely to still continue to attract buyers.

Source : DTZ (Groupe UGL)

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