Latest property measures more effective: NUS study

Published 29 April 2011
The Business Times
By Kalpana Rashiwala

NUS residential price index flat after Jan, Aug ’10 compared to earlier measures

A study by NUS’s Institute of Real Estate Studies suggests the two latest rounds of property cooling measures on Aug 30 last year and Jan 13 this year may have been more effective in taming prices of completed non-landed private homes than the earlier two series of tightening measures in September 2009 and February 2010.

Latest property measures more effective: NUS studyNUS’ overall Singapore Residential Price Index (SRPI) has inched up about 0.19 per cent on average per month since the January measures were introduced. It also increased only about 0.12 per cent on average per month from the time the end-August 2010 measures were introduced till December last year.

In contrast, the September 2009 and February 2010 cooling measures were followed by average monthly increases in the SRPI of 1.13 per cent and 1.23 per cent respectively.

The index covers only completed non-landed private homes.

Average monthly sales volumes of non-landed private homes – covering transactions in both the primary and secondary markets but excluding executive condos (which are a hybrid of public and private housing) – have shrunk to 1,391 after the latest Jan 13 cooling measures (based on URA Realis caveats data up to April 21).

The monthly sales volume following last August’s tightening package was 2,490 units, while the figure after the February 2010 cooling measures was 2,907.

‘We’re now seeing the cumulative effect of continuing tightening measures implemented since September 2009,’ said an analyst.

Associate Professor Lum Sau Kim of NUS’s Institute of Real Estate Studies and Department of Real Estate said: ‘The policy interventions sought to tighten leverage and dampen speculative build-up in the housing market.’

‘Other than the February 2010 measures, the rate of price appreciation for non-landed private homes and sales volumes have declined following each policy date. However, these declines have been temporary and suggest that other drivers of home price and transaction activity may have overwhelmed the macro-prudential measures,’ she added.

Market watchers recapitulated some of the factors that continue to fuel interest in Singapore’s property market despite steps by the authorities to try to dampen the market: high liquidity, diversion of hot money from overseas markets like China and Hong Kong to Singapore’s real estate market, the low interest rate environment and the appeal of property as a hedge against inflation.

DTZ’s head of consulting & research (SE Asia) Ong Choon Fah said: ‘Usually there will be a knee- jerk reaction every time there is a policy as market participants start to evaluate the likely impact. They want to wait for a while to see what happens and if nothing much happens, they start to enter the market again.’

Mrs Ong also recalled that the government began implementing the cooling measures in a very calibrated way starting with increasing land supply. ‘But when these didn’t seem to produce the desired result, they started to address the demand side as well and that’s when we began seeing a more significant impact on the market.

‘And as we start to see all the supply materialising both in terms of marketing of new projects and physical completion of projects launched earlier, reality will hit home. A lot of people bought properties for investment and will need to find somebody to lease them or sell them to.’

NUS’s latest flash estimates for its March 2011 SRPI also showed that prices of completed apartments and condos fared better in suburban locations than in the poshest areas.

The SRPI sub-index for the Central Region, which covers districts 1-4 and 9-11, dipped 1.9 per cent month-on-month in March, according to NUS’s flash estimates. This sub-index has appreciated 2.6 per cent since the end of last year and 8.6 per cent year on year.

In contrast, the sub-index for the Non-Central region, where suburban mass-market condos are located, appreciated 1.7 per cent month on month in March. The flash estimate for March was up 3.8 per cent year to date and 14.4 per cent year on year.

As a result, the overall SRPI rose 0.1 per cent month on month in March; the March flash estimate reflection price gains of 3.3 per cent year to date and 11.9 per cent year on year.

Meanwhile, Frasers Centrepoint and Far East Organization have sold 336 of the 500 units released at their Eight Courtyards condo in Yishun since they began previewing the project on April 15. The average price is $795 per square foot. The 99-year leasehold project has 654 apartments.


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