Singapore’s home sales plunged 65 percent to a 14-month low in February after the government introduced its seventh round of cooling measures to cool record home prices.
Home sales dropped to 708 units in February from a revised 2,016 units in January, according to data released by the Urban Redevelopment Authority today. That’s the smallest number of residences sold since December 2011, when sales declined to a two-year low of 632 units.
Singapore home prices reached a record in the fourth quarter amid low interest rates, raising concerns of a housing bubble and prompting the government to widen a four-year campaign to curb speculation prices in Asia’s second-most expensive housing market. Knight Frank Pte cut its estimates for new home sales for 2013 by 20 percent and expects annual sales to range between 12,000 and 14,000 units.
“The government’s measures are starting to take effect,” said Vijay Natarajan, a Singapore-based analyst at UOB-Kay Hian Pte. “In addition, fewer units were offered because of the Chinese New Year. Over the coming months, I expect volumes to decline further.”
The city’s businesses were shut on Feb. 11 and Feb. 12 for the Chinese New Year holiday, limiting sales opportunities over an extended weekend.
Home sales reached 22,699 units in 2012, according to calculation by Bloomberg News based on the government data, which dates back to 1996.
Q Bay Residences in the city’s northeast, developed by Far East Organization and Fraser & Neave Ltd.’s property unit, sold 74 homes last month, while buyers bought 84 units at Topiary in north-central Singapore, according to the data.
The latest measures included 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.
Singapore also plans to raise taxes for luxury homeowners and investment properties. The higher tax will apply to the top 1 percent of homeowners who live in their own residences, or 12,000 properties, Singapore Finance Minister Tharman Shanmugaratnam said in his budget speech on Feb. 25. He said in a Feb. 28 interview the property market is still “in a wrong part of the cycle.”
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.
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.