Property caveats lodged in May down 41% on-month

It’s official – Singapore’s private residential property market cooled significantly in May.

The number of caveats lodged fell 41 per cent on-month to 1,979, according to latest figures from Singapore Institute of Surveyors and Valuers.

Still, property analysts do not expect foreign investor’s appetite for homes to be dampened.

Industry data showed that District 4, which includes the Sentosa, Keppel Bay and Telok Blangah areas, saw the biggest drop in caveat numbers, with a 76 per cent decline.

Meanwhile, Districts 1 and 2, covering Marina Bay and Shenton Way, fell by about 75 per cent.

Caveat numbers across all districts in Singapore fell on-month ranging from 57 per cent for the Orchard area to a 24 per cent drop for District 5 at West Coast and Pasir Panjang.

Property analysts attributed May’s steep decline in sales volumes to fewer new launches by developers.

They said buyers are also holding back their purchase, while waiting for home prices to fall.

Chris Koh, director of Dennis Wee Group said: “A lot of buyers today feel that prices are too high so there’s no need to buy. So when the buyer takes a wait-and-see attitude, that’s when the number of transactions come down.

“Those who wanted to buy would have bought during the last one year when they saw prices escalating and they want to jump in and buy.”

Coupled with the World Cup fever, observers expect caveats for the next two months to stay at up to 2,400 units per month. That’s about 21 per cent down from the 3,053 caveats lodged in March.

Despite the caution in property market, Sentosa Cove was in the news recently after a bungalow was bought by a Chinese national at a record S$36 million, or around $2,400 per square foot.

Still, industry players do not expect cooling sales volumes to affect demand for high-end properties like Sentosa Cove.

“In fact, a neighbouring property at Sentosa went above 2,300 per square foot. In other words, there are real investors willing to put their money to invest in Singapore. Because they do believe in the long-term appreciation of the property,” said Mohamed Ismail, CEO of PropNex.

According to PropNex, landed properties in Sentosa currently cost about S$2,000 per square foot on average.

But it expects prices to dip to S$1,800 to S$2,000 per square foot as a result of the World Cup season.

Source: Channel News Asia, 21 Jun 2010