Singapore home sales rose 43 percent in January from the previous month as buyers rushed to purchase homes right after the government announced cooling measures to ease residential prices.
Home sales increased to 2,013 units in January from 1,410 units in December, according to data released by the Urban Redevelopment Authority today. Sales reached 22,699 units in 2012, according to calculation by Bloomberg News based on the government data, which dates back to 1996.
“This is a bit of an abnormality and the increase was a bit of a surprise,” said Nicholas Mak, the executive director at SLP International Property Consultants, who said developers extended the hours of their sales office on the eve of the curbs. “February will be lower than January because this is when the effects of the cooling measures will be felt.”
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.
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.
Mak said the curbs were also partly offset by price cuts by developers, some offered through rebates. He expects prices for so-called mass-market homes to increase between 1 percent and 5 percent this year. For high-end homes, or those in prime districts, prices may rise 2 percent or decline as much as 8 percent depending on buyers’ reactions to the measures, he said.
Singapore’s property index rose 0.3 percent at the close to the highest in almost five years. The measure has climbed 2 percent since the curbs were announced last month, recovering from a 1.6 percent decline on the first trading day after the measures.
Knight Frank Pte cut its estimates for new home sales for 2013 by 20 percent after the measures and expects sales to range between 12,000 and 14,000 units this year.
“Despite the strong sales volume in January, there could be a potential decline in demand for private homes for the next two months in first quarter this year by about 10 to 15 percent, as the private residential market fully absorbs the impact of the seventh round of property cooling measures,” property broker, Knight Frank, said in an e-mailed statement today.
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 also tightened 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.