Singapore’s home sales rose in August as developers marketed more projects, rebounding from July when they slumped to the lowest since December 2009.
Home sales increased 54 percent to 742 units last month, compared with 482 in July, according to data from the Urban Redevelopment Authority released today. Sales in August last year were 1,427 units.
Sales are recovering after the government in June unveiled new rules governing how financial institutions grant property loans to individuals. Record home prices amid low interest rates raised concerns of a housing bubble and prompted the government to widen a more than four-year campaign to curb speculation in Asia’s second-most expensive housing market, according to Knight Frank LLP and Citi Private Bank report.
“We are seeing a gradual recovery after the July sales, which were a knee-jerk reaction to the loan measures,” said Nicholas Mak, executive director at SLP International Property Consultants in Singapore. “Now the market is adjusting to the new loan rules and banks are speeding up the loan process.”
The market will stabilize with sales in the range of 700 to 1,400 units a month over the next few months, Mak said.
Among the developers that began sales of their projects was Wing Tai Holdings Ltd., which marketed its condominium in the Tampines area, an eastern suburb of Singapore. It sold 218 units of 337 marketed last month, the data showed. RV Residences, offered by Allgreen Properties Ltd., in the central district sold 39 of 83 units sold, the data showed.
The new loan framework requires that lenders take a borrower’s debt into consideration when granting property loans, the Monetary Authority of Singapore said June 28. Home loans should not exceed a total debt-servicing ratio of 60 percent and those that do will be considered imprudent, it said.
The government 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 rise to 25 percent from 10 percent starting from the second loan, it said.
The island-state’s private residential property price index rose 1 percent to 215.4 points in the three months ended June 30, extending a 0.6 percent increase in the first quarter, according to data from the Urban Redevelopment Authority on July 26. Suburban home prices climbed 3.8 percent in the June quarter, compared with the 1.4 percent increase in the previous quarter, according to government data.
Singapore revised development charge rates for commercial, residential and industrial plots from Sept. 1 through Feb. 28, the Ministry of National Development said on Aug. 30. Rates for residential landed properties were raised by an average 7 percent while those for non-landed properties rose 5 percent.
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.