Singapore property sales have dropped a staggering two-thirds in a month as government cooling measures took some of the heat out of the nation’s property market.
Sales plunged by 65% from just over 2,000 in January to just 708 in February, according to the latest figures from the official Urban Redevelopment Agency.
The government acted to cool property by upping stamp duty for foreigners and raising cash deposits for investors who already have a main home.
Property prices have risen month-on-month for some time despite the economic growth falling as wealthy Chinese investors looking for a safe haven for their cash looked to Hong Kong and Singapore to buy property.
Both cities have had soaring property prices that have forced the government to step in to quell over concerns that a housing crash was looming.
Huge demand to buy
In Singapore, the government restrictions forced developers to hold back new starts and off-plan sales.
Demand far exceeds housing supply in Singapore, and the government is rushing through a massive development of thousands of homes in a bid to satisfy demand and push down prices.
At the same time, the economy has suffered a setback – dropping from growth of more than 5% in 2011 to 1.3% in 2012, although the figure is expected to rise to between 1% and 3% for 2013.
Estate agents in Singapore claim the sales trend was in line with expectations for the New Year, which is an extended holiday in Singapore and many Asia Pacific countries.
But, they expect the plunge in sales to be a one-off rather than a trend as a big demand for housing still exists and rich investors have the cash to input in to purchases as deposits.
Cooling measures
Market watchers also observed the cooling measures coupled with the holiday made assessing market pointers difficult for developers – and this will ease as the population returns to work.
“Now that everyone can see how the cooling measures are going to work developers are ready to launch more projects in March and April. The coming months will test demand and the determination of the government to control the market,” said Chia Siew Chuin, director of research and advisory at Colliers International.
The Singapore government has also announced the housing market will remain under close scrutiny and further intervention to control price rises has not been ruled out.
