New home sales surpass 2007 peak

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Not a big surprise eh? Prices on this small island seem to love going up!

Dec 16, 2010
New home sales surpass 2007 peak

Analysts predict that more cooling measures could be introduced
By Esther Teo

THE private property market showed signs of defying gravity last month with an unexpectedly large number of new homes sold.

Top-selling projects such as The Lakefront Residences near the Lakeside MRT, Waterview in Tampines and Spottiswoode Residences helped raise the total to 1,909 units sold.

The November tally brings the total number of new homes sold so far this year to 15,025, surpassing the previous record of 14,811 in 2007.

The numbers show that sales of mid- to mass-market suburban homes made up the bulk of the transactions. If executive condominiums such as The Canopy and Esparina Residences were included, last month's figure moves even higher to 2,084 units.

Experts said last month's figures highlight an unusual buzz in a traditionally quiet month and are surprising coming within three months of the Government's Aug 30 cooling measures.

These included reducing the amount banks could lend for second mortgages from 80 per cent to 70 per cent of the valuation.

Jones Lang LaSalle (JLL) head of South-east Asia research Chua Yang Liang suggested that projects in good locations could be a factor attracting buyers.

For example, The Lakefront Residences is near an MRT station as well as the Jurong Lake District, which is being developed into a major regional centre.

Another factor could be the current low interest rates, which leave investors looking for alternatives in which to park their cash.

However, Dr Chua reckoned that the strong sales numbers increased the risk of further cooling measures from the Government. He even predicted that the Government could act as early as within a month.

Ms Tay Huey Ying, Colliers International research and advisory director, echoed his sentiments, though she expected stiffer measures within the next two to three months.

She said the November sales showed the recent cooling measures to be 'less than effective in taming the buying frenzy'.

'If left unchecked, there is a potential that the current buying fever could put upward pressure on home prices again,' she said.

Among government leaders who have said that they are watching the market closely was Prime Minister Lee Hsien Loong. He said last month that the Government was watchful of a bubble forming.

National Development Minister Mah Bow Tan last month flagged a number of concerns, such as low interest rates and an abundance of investor liquidity elsewhere, which could push up real estate prices.

Anti-speculation measures in Hong Kong, Taiwan, mainland China and South Korea could also result in more funds heading here.

He said the Government would introduce more measures to curb property prices if there was a need to do so.

But given that the Aug 30 measures had only just been implemented, the Government would monitor the market for now and was 'watching it like a hawk', he said.

Home prices for the July-September quarter saw some moderation with a 2.9 per cent increase, down from 5.3 per cent the quarter previously, suggesting that the measures had an impact in September.

Analysts expect that new cooling measures, if introduced, might include reducing the loan-to-value ratio and having a higher stamp duty for those who make more than one property purchase within a year.

Meanwhile, the strong sales numbers may spur developers to launch their projects as soon as possible in order to avoid being caught by a possible new round of cooling measures, said Mr Ong Kah Seng, senior manager of Asia-Pacific research at Cushman & Wakefield.

Still, the strong demand, however, might be an indication that there are many genuine buyers with deep pockets, said Ms Christine Sun, senior manager at Savills Research & Consultancy.

Also, while the volumes are strong, they do not tell the entire story.

According to CB Richard Ellis, the total value of homes sold up to last month was $16.98 billion. This is still some 30 per cent lower than the $24.11 billion notched up in 2007.

One factor is probably due to the shoebox-sized units sold in many of the new launches.
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When the powers that be look at rising prices as increasing wealth, who else can say otherwise?
(22-12-2010, 12:49 AM)Jon-san Wrote: When the powers that be look at rising prices as increasing wealth, who else can say otherwise?

The power of the common people, of course! (Vote!) Tongue
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