Government intervention is the main risk faced by Singapore’s property market this year, according to a recent report published by property management firm Jones Lang LaSalle. Record levels of units expected to be completed in coming years are also likely to increase risk in Singapore’s property market, according to the report.
Jones Lang LaSalle expect buyers in Singapore to take advantage of cheap mortgage rates this year by purchasing properties in good locations, as there are no indicators to suggest that interest rates will rise in the coming 12 months.
The latest round of cooling measures introduced by the government in January is anticipated by Jones Lang LaSalle to have an impact on buyers purchasing their second and/ or subsequent property.
Any substantial pick-up in sales will not happen before a significant recovery in the global economy, according to the report.
Research by Jones Lang LaSalle also shows that total sales volumes in Singapore have weakened as a result of recent government policy.
Luxury prime rents remain steady as they continue to be supported by renewal demand, but luxury prime capital values have declined due to uncertainty in the market.
Total sales volumes for condominiums in the prime market dropped from 509 units in Q32012 to 457 units in Q42012, according to preliminary estimates from the Urban Redevelopment Authority (URA).
Jones Lang LaSalle recorded weakening sales in every segment of the market. Transactions in the new sale market fell the most, declining by 22.8 percent quarter-on-quarter.
The implementation of cooling measures in Singapore on October 5 also had a negative effect on demand throughout Q42012, according to the report.
The number of new projects completed in Q42012 decreased by 62 percent quarter-on-quarter following the confirmation of supply numbers in Q32012 by the URA.
Approximately 406 units were completed in Q42012, with Trilight at Newton adding 205 units to the market.
The loan to value curb on all property purchases and the government’s warning about the influx of foreign workers influenced overall business sentiment and the purchase and leasing demand for residential properties.
Prices in the luxury prime market dropped from S$25,618 (US$20,601) per sqm to S$25,403 (US$20,428) per sqm in Q42012, a decline of 0.8 percent quarter-on-quarter.
Capital values rose 0.6 percent quarter-on-quarter from S$14,585 (US$11,729) per sqm to S$14,671 (US$11,798), compared to the rise of 0.4 percent seen Q32012.
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