By Mr. Propwise

It’s been almost five months since the announcement of the seventh round of property cooling measures by the government, which imposed steeper stamp duties and lower loan-to-valuations for mortgages. Have the measures had their intended effect to curb the rapid rise of property prices in Singapore?

2013Q1 URA PPI moderated, but prices accelerated in April

If we look at the 0.6% increase in the 2013Q1 URA Property Price Index, a slowdown from the previous quarter’s 1.8% increase, it might appear that the cooling measures have had some impact to slow the growth of property prices.

But the recent flash estimate of the Singapore Residential Price Index (SRPI) published by the Institute of Real Estate Studies at the National University of Singapore indicated that home resale prices accelerated to a 1.9% increase in April, compared to a 1.1% increase in March.

In particular, prices of private homes in the Outside Central Region rose the fastest by 2.4%, while homes in the Central Region rose by 1.3%. Even prices of shoebox units (defined by the SRPI as units of size 506 square feet and below), also increased by 1.8% versus the 0.8% increase in the previous month.

Resale transaction volumes picking up

Looking at the volumes of private residential property sales tells a similar story of a property market that is raging on, shrugging off whatever shackles the government has been trying to throw on it.

After a dip in February due to the market uncertainty of the impact of the seventh round of measures, volumes recovered strongly in March. While there was a dip in the total transaction volumes in April, likely due to a fall in the amount of new launches by developers, resale volumes have been steadily recovering with an estimated increase of 20% in April after a 65% increase in March.

Figure 1 – Monthly Residential Sales Volumes (from

Real estate agency PropNex has been quoted as saying that resale transaction volumes also increased by roughly 20% in May, continuing this trend of recovery. Anecdotally, they said that buyer inquiries and the number of viewings have also improved due to the buyer perception of better value and rental yields in the resale market.

All of the above suggests that after a brief respite in February, market volumes and prices are roaring back. This is despite seven rounds of property measures which have greatly increased the transaction costs of buying property and reduced the leverage that buyers can take, the constant government “naggings” to talk the property market down, the slowing growth rate of the non-Singaporean population, and in the face of the large supply of more than 100,000 residential units (including public housing) in the pipeline.

I believe that this goes to show the overwhelming impact that ultra-low interest rates have had on the market, which have distorted asset prices and created an insatiable hunger for yield and an expectation of unstoppable price increases in the minds of buyers.

Developers setting lower prices for new launches?

But with many properties now only offering yields of 2% to 3%, what happens when mortgage rates normalize back to 4%? Things may already be changing at the margin, with the United States Federal Reserve now suggesting that its easy monetary policy may eventually be tapered off.

While demand for property is still strong, buyers are increasingly becoming more selective and going into bargain hunting mode. We are also seeing signs of developers reacting by reducing launch prices. For example, CDL launched the 616-unit Jewel near Buangkok MRT over the weekend, pricing it at around S$1,100 per square foot, around 15% below that of new projects one MRT stop away on both sides (i.e. between Sengkang and Hougang stations). We may be entering an environment where developers can still sell units – but only at the right price.

Meanwhile, watch out for a potential eighth round of property measures from the government. Perhaps eight will be the lucky number (at least for property buyers)?

By Mr. Propwise, founder of top Singapore property blog, a Chartered Financial Analyst and resident real estate analyst at, a site to help property owners and investors make profitable decisions in uncertain times.


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