Cooling measures may keep lid on private home prices: Experts

The cooling measures put in place earlier this month are likely to cap the growth in private home prices for the rest of the year.

"Sales are likely to be slower as more buyers, especially those buying a second home to invest, are likely to wait on the sidelines. Notwithstanding that, buyers will still purchase if the project offers a value proposition," said Dr Lee Nai Jia, senior director and head of research at Knight Frank Singapore.

The luxury market will be the hardest hit due to the larger quantum involved, said ERA Realty key executive officer Eugene Lim. He is projecting a 7 to 10 per cent rise in prices this year, down from his previous 10 to 12 per cent estimate.

OrangeTee & Tie's head of research and consultancy Christine Sun also narrowed her overall price projection for the full year to between 8 and 10 per cent from the original 8 to 12 per cent. "Although new launch prices may now be slightly lower than expected, we may still observe benchmark prices in selected locations, as some developers have acquired land parcels at high prices and are probably not willing to sell their units at a loss."

ZACD Group's executive director Nicholas Mak said that the residential price property index is expected to rise by 8 per cent to 12 per cent year on year for 2018.

Analysts also highlighted the relatively low levels of completed supply in the near term, and its impact on vacancy and rents. The vacancy rate for completed private residential units (excluding executive condominiums or ECs) fell by 0.3 percentage point to 7.1 per cent at the end of the second quarter.

Rents posted a 1 per cent increase, compared with the 0.3 per cent rise in the previous quarter. This likely was a result of low new home completions in the second quarter, according to JLL national director for research and consultancy Ong Teck Hui.

Rents are likely to be supported in the near term, with this year's completed private homes excluding ECs to hit 9,930, a sharp drop from 2017's 16,449 completed units, observed Colliers International's Singapore research head Tricia Song. "Given the easing supply going forward, we expect occupancy to continue to improve, and rents could recover by another 2 per cent in (the second half of) 2018, and 5 per cent in 2019, barring any external shocks."

As of the end of the quarter, there were 45,003 uncompleted private residential units (excluding ECs) in the pipeline with planning approvals, compared with 40,330 units in the previous quarter.

Adapted from The Straits Times, 28 July 2018.