Singapore home sales rebound as buyers ignore cooling moves
Private home sales in Singapore jumped 51pc in September as developers marketed more projects post the hungry-ghost festival month, a period Chinese buyers consider inauspicious, and as buyers moved past the additional cooling measures imposed in July.
Developers in the city-state sold 932 units, the Urban Redevelopment Authority said in a statement Monday. That compares with 617 units in August, the data show. Total apartments launched for sale last month more than doubled to 1,169. The 932 apartments was 42pc higher year-on-year.
Singapore private home prices are still inching higher - albeit at the slowest pace in five quarters. An index tracking private residential prices increased 0.5pc in the three months ended September 30 versus a 3.4pc advance in the June quarter, according to a flash estimate from the Urban Redevelopment Authority on October 1.
"Market confidence seems to have improved with seven new private residential projects launched in September," said Ong Teck Hui, national director of research and consultancy at JLL.
"While it is early days to make a pronouncement of the full effects of the cooling measures, it would appear that while demand has slowed, many buyers are still on the market and are prepared to purchase at prices which they deem as reasonable."
Singapore took renewed steps in July to cool the island's property market after home prices rose more than 7pc in the first six months of the year. A rush of transactions was fuelled by aggressive land bids from developers and so-called en-bloc transactions, which is where a group of owners band together to sell an entire apartment building.
Under the new rules, individuals taking out their first housing loan face stricter borrowing limits, meaning they have to stump up more cash upfront. For foreign purchasers of residential property, the additional buyer's stamp duty was increased to 20pc from 15pc. For Singapore citizens, the extra charges only apply from their second home purchase.
Home prices on the island may rise as much as 10pc by the end of 2019 and are on track to double by 2030 as faster income growth overpowers the recent property curbs and higher interest rates, Morgan Stanley said last week.
Home prices rose in four of the five previous rate hike cycles, Morgan Stanley analysts said in a note to clients. Faster economic growth, the city-state's attraction as a global hub and demand from buyers flush with cash from en-bloc redevelopments will underpin the housing market, they said.
The bullish outlook came after the latest property curbs prompted the analysts to revisit last year's forecast that home prices would double by the end of next decade.
"Contrary to common perception, we believe housing supply/demand dynamics remain favourable, and we anticipate a wave of capital inflows into the housing market," Wilson Ng and his colleagues said. "Housing supply is still below historical averages and set to fall."
The government has emphasised the goal of the property curbs is price stability and sustainable growth in line with economic fundamentals.
Morgan Stanley expects policy interventions to apply equally to both up and down-cycles, so if prices decline the government could relax some of the property curbs, the analysts said. The government rolled out eight rounds of policy tightening for the housing market as home prices surged 60pc between 2009 and 2013. It partially removed seller stamp duties in 2017, before re-embarking on curbs in 2018. Because most of the measures from the previous tightening cycle remain in place, this leaves a much wider toolkit to stimulate the housing market should the need arise, Morgan Stanley said.
Singapore will also stay relevant as a global hub, which will help attract capital inflows into the property market, analysts at the New York investment bank said.
A wave of mega-flagship projects, such as a new terminal at Changi Airport, highlight government efforts to enhance Singapore's competitive edge as a vibrant global city in attracting foreign capital and talent.
Hong Kong, meanwhile, surprisingly rejected all the bids for a residential site on the Peak, one of the city's most-exclusive neighbourhoods, in the first failed land tender in more than two years.
All five bids did not meet an undisclosed reserve price, the government said on Tuesday, adding it will not speculate on the reasons. The site was initially expected to fetch a record price of as much as HK$32.3bn ($4.1bn) because of its location. Major developers in Hong Kong and China were among the bidders, including Sun Hung Kai Properties Ltd., Henderson Land Development Co Ltd., CK Asset Holding Ltd. and China Overseas Land & Investment Ltd.
The failed tender followed the increase of best lending rates among Hong Kong banks in late September and a slowdown in the luxury home market. In June, the government proposed to introduce vacancy tax on unsold new residential units, which would affect premium homes the most as it typically takes longer to sell them.
"The developers definitely need to re-do their maths because of the vacancy tax," said Joyce Kwock, head of Hong Kong property research at Nomura International (HK) Ltd. "These kind of properties can only be launched and sold after completion."
Luxury home sales in the city have been slowing, with transaction values for new properties worth more than HK$20m dropping by 72pc in August from the month prior, according to Centaline Property Agency Ltd.
In a worsening property market, developers "would not dare" to splash out on a single plot because of the risks, James Cheung, senior executive director at Centaline Surveyors Ltd, said in an emailed statement.