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Singapore Home Sales in May Decline to Lowest This Year

June 15 (Bloomberg) -- Singapore’s May private home sales fell 32 percent from a month ago, posting the lowest sales this year as the Europe crisis damped demand.

Private home sales fell to 1,702 units last month from this year’s peak of 2,496 units in April, according to data from the Urban Redevelopment Authority. Sales fell below 2,000 units for the first time in four months.

“There has been greater uncertainty in the market because of the Euro zone crisis,” said Nicholas Mak, executive director at SLP International Property Consultants, a real estate consulting company. “That’s resulted in lower sales and a more cautious approach from buyers.”

Singapore’s benchmark Straits Times Index dropped 6.9 percent in May, its worst monthly drop since September 2011, amid concerns the European debt crisis may worsen. The city’s private home price index declined 0.1 percent in the first quarter, the first decline in almost three years.

The lower sales may fend off further measures from the government, according to Bank of America Corp. Singapore is unlikely to introduce additional measures to cool the housing market because of a weak economic outlook and lower property transactions, analysts at Bank of America’s Merrill Lynch unit and JPMorgan Chase & Co. said.

‘Severe Blow’

“A fragile economic outlook and softness in the broader property market suggests that another round of measures may be unwarranted at this point,” Hak Bin Chua, a Singapore-based economist at Merrill Lynch, wrote in a note to clients yesterday. “The last round of measures in December already dealt quite a severe blow to overall sentiment and transactions.”

The index tracking property stocks in Singapore climbed to a one-month high.

Singapore has been attempting to rein in prices since 2009, when the government barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built. Foreigners and corporate entities have to pay an additional 10 percent stamp duty following measures introduced in December. The extra levy is 3 percent for permanent residents purchasing a second home and for citizens buying their third residential property.

“Going forward, there are early signs that new home sales momentum is slowing down due to changing external circumstances,” Li Hiaw Ho, executive director at CBRE in Singapore, said in an e-mailed statement. “As such, we do not expect the sales volume in the second half to be as high as the first half.”

Home sales have climbed 54 percent to 10,880 units this year, according to the data. Prices rose 1.1 percent for the mass market in the same period, the authority said.

Flo Residence in the northeastern suburb of Punggol contributed the most to sales last month, with 266 units, according to the government data. Sales were also boosted by the SeaHill development in the west of the city with 200 homes sold, while 192 apartments of the 862 marketed at Eight Riversuites in the central Whampoa East suburb were bought in May.

To contact the reporter on this story: Pooja Thakur in Singapore at pthakur@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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