Singapore home sales rose to a record last year, fueling prices to an all-time high and prompting the government to introduce cooling measures last week.
Home sales climbed to 1,410 units in December from 1,087 units in November, according to data released by the Urban Redevelopment Authority today. Home sales reached 22,699 units in 2012, according to calculation by Bloomberg News based on the government data, which dates back to 1996.
Singapore home prices reached a record high in the fourth quarter amid low interest rates, raising concerns of a housing bubble and prompting the government to introduce its seventh round of cooling measures on Jan. 11.
“Sales volumes are likely to dampen in the coming months,” Png Poh Soon, director of valuation and head of consultancy and research at Knight Frank Pte in Singapore, said in a note today. “Whilst pent-up home buying demand is strong, the higher stamp duties, tighter loan-to-value limits and higher cash down payment would deter home buyers, who do not have the cash resources for their planned purchases.”
Knight Frank cut its estimates for new home sales for 2013 by 20 percent and expects sales to range between 12,000 and 14,000 units this year.
The latest measures include an increase in the stamp duty for homebuyers by between 5 percentage points and 7 percentage points, with permanent residents paying taxes when they buy their first home. Singaporeans will also have the levy starting with their second purchase.
The government will also tighten the loan-to-value limits for buyers seeking a second mortgage, referring to the amount they are allowed to borrow relative to the value of their properties. The cash down payment will also rise to 25 percent from 10 percent starting from the second loan, it said.
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.
Earlier steps taken by Singapore to ease the property market included imposing additional taxes on foreigners and companies buying properties, and moving to curb the trend of so-called shoebox apartments. In October, it restricted home-loan maturities to 35 years and required tighter loan-to-value limits for loans exceeding 30 years.