Prices of private property in the resale market could still head north despite the Government’s measures to curb speculation, said industry players.
The reason: People who held back hoping that prices would fall in the recession last year, but are now keen to enter, given the rebound in the market.
Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that based on caveats for last month, the resale market is showing strong volume.
Statistics from the Urban Redevelopment Authority showed there were 3,353 resale transactions in the fourth quarter last year, compared to 5,798 in the third quarter and 4,164 in the second.
Mr Mak added: ‘With the economy picking up and greater job stability, people are buying as their sentiment has turned positive and there are expectations the market could pick up.’
Said ERA agent David Lim: ‘A lot of people reckon we are still probably at the foot of the mountain, and that they should go in now.’
His average monthly transactions for private resale properties have gone up, from three or four last October to five or six in December and January.
Buyers now face tighter rules to curb speculation.
Lending institutions will now be allowed to lend only up to 80 per cent of the value of the property, not 90 per cent.
Anyone who sells a property within a year of buying it must now foot stamp duty of around 3 per cent.
Still, those with deep pockets can still speculate but they may be less active, said ERA agent Eugene Ow.
Mr Lim forsees another peak this year in terms of prices. He said: ‘A large part of the investors with real money can still go in despite these measures.’
Even if they need loans, they might not need the full 90 per cent in the first place anyway, he added.
Commenting on the new measures, Knight Frank property consultant Peter Ow said mid- to long-term buyers with a horizon of more than two to three years would not be discouraged.
Also, the high-end and landed property segments should not be badly hit as people usually buy these for occupation, not speculation.
Mr Peter Ow added: ‘The upgrader market will be the one affected; these are the people moving up from HDB flats to condominiums. They’re the ones who borrow to the maximum of 90 per cent.’
Mr Steven Tan, executive director of property firm OrangeTee, said most banks have already been discouraging clients from taking up 90 per cent loans.
He said: ‘After the financial crisis, most banks tightened credit policies and put a much higher interest rate on those borrowing 90 per cent.
‘So buyers are prepared to borrow less.’
Another reason for prices possibly going up? The fear that more curbs will kick in.
Mr Mak noted the Government has yet to apply all the meaures at its disposal to cool the market.
‘They could put in capital gains tax, or extend stamp duty from one year to maybe two years,’ he said.
Source: Sunday Times, 21 Feb 2010
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