Signs of property market cooling; hot spots remain

The various measures to cool the property market have borne encouraging signs, but trouble spots in the form of shoe-box units and rising mass market prices remain, said National Development Minister Khaw Boon Wan in Parliament yesterday.

As of the end of the first quarter of this year, there are about 2,500 completed shoe-box apartments (defined as units of less than 700 sq ft), which make up 1.2 per cent of the 210,000 non-landed units in the private housing stock. Looking ahead, this stock is expected to increase to about 9,700 by 2015.

While about 80 per cent of the completed units are located in the Central Region, many of the new units will be located in the heartlands, where their appeal to tenants remains untested, said Mr Khaw.

Separately, mass market property prices outside the Central Region have continued to rise, even as private housing prices have started to stabilise in the central region, noted Mr Khaw.

A combination of the measures rolled out thus far, have produced some results, noted Mr Khaw.

Private home prices registered a marginal decline in Q1 this year for the first time, following nine consecutive quarters of moderating price increases. In addition, the proportion of sub-sales in the market, a proxy for the level of property speculation, has fallen sharply to about 4 per cent. The additional buyer's stamp duty (ABSD) has also helped reduce the proportion of private residential property bought by foreigners and companies to 7 per cent.

"In the public housing market, most first-timers now have a chance to select a BTO flat if they apply for one. HDB resale prices have also moderated, increasing by 0.6 per cent in Q1 2012. This is the smallest price growth in recent years," added Mr Khaw.

Source: Business Times – 15 May 2012