ST : Wait-and-see over property measures

Sep 12, 2010

Wait-and-see over property measures

Analysts say more people are sitting on the sidelines and prices unlikely to head south any time soon

By Joyce Teo

Last Wednesday, one mass market condominium project in Pasir Ris attracted 160 buyers on its preview day.

This caught many property experts by surprise because the Government had just announced measures aimed at cooling the property market on Aug 30.

But the market has since largely settled into a stalemate, as buyers wait for prices to fall while sellers refuse to budge on their prices.

But property experts say robust sales at the 642-unit NV Residences in Pasir Ris Grove have not affected the general mood in the market.

'Most people are still in the wait-and- see mode,' said ERA Asia Pacific associate director Eugene Lim.

'NV Residences is near the MRT station and keen buyers got the first cut. This was the initial response, which is usually good,' he said.

'We'll have to see how quickly the rest of the project sells.'

Experts believe buyers were likely drawn to the project's affordable pricing. Also, agents had started drumming up interest in the project some time back, before the cooling measures were introduced.

Said ECG Property chief executive Eric Cheng: 'We can't judge the market by one launch. There are other projects that are not performing as well.

'I believe market sentiment has been affected by the measures and developers will have to be realistic.'

Property experts say sales volume will drop as more prefer to sit on the sidelines. They are unsure if prices will head south but if they do, it will not be any time soon.

Mr Cheng's advice for buyers is: 'If you're not in need of a property immediately, you can wait a while. We feel that prices will stabilise or fall slightly by 3 per cent to 7 per cent.'

The new measures include tighter lending rules for those with existing mortgages looking to buy another property. They can now borrow up to only 70 per cent of the property's value, down from 80 per cent.

Those who buy an HDB resale flat on or after Aug 30 must sell their private property - including any held overseas - within six months of the HDB purchase.

'I think the HDB resale market prices will correct first,' said Chesterton Suntec International's research and consultancy director, Mr Colin Tan.

'If we bar investment monies from flowing into this HDB segment, prices may start to correct, especially if these hot monies have been mainly responsible for the rise in resale flat prices.'

But at the moment, liquidity is still very strong, said Mr Tan.

'It is a global problem and it is not easy to tackle... We may have slowed down the price increases, but prices are still rising.'

Another property expert said: 'We will have to wait till the end of the year to see if there is a price correction in the HDB market.'

But certainly, 'sellers can no longer ask for high COVs unless their flats are very special. For example, if they were very nicely renovated', said ERA's Mr Lim.

COV is cash over valuation, the amount of cash a buyer has to fork out on top of the valuation price.

An experienced industry source who declined to be named said: 'Things won't likely change very much in the next few months.

'I think people will still buy and prices may still rise. We will have to wait till perhaps early next year when supply kicks in, in both the HDB and private markets.'

The Government will offer more than 16,000 new build-to-order flats this year and up to 22,000 next year.

It is also pushing out a record amount of land for sale in the second half of this year.

joyceteo@sph.com.sg