Bankers caution home buyers on impact of higher interest rates
Bankers have warned buyers, especially those eyeing investment properties, to assess the impact of higher interest rates before they make a decision...
The recent property cooling measures could have a positive impact on first-time home buyers in Singapore.
UPDATED: With the new property cooling measures, PropNex Realty said developers have been forced to price their new projects more sensitively – which could appeal to first-time home buyers irrespective of the five percentage point reduction in loan-to-value (LTV) limits, reported Singapore Business Review.
The company also believes that investors are already getting used to stamp duty hikes compared to previous instances, said Jefferies Singapore.
In fact, foreign investors have already factored in the 15 percent Additional Buyer’s Stamp Duty (ABSD), while buyers will soon get used to the five percentage point hike in ABSD.
Singaporeans accounted for 74.6 percent of private property purchases last year, up from 68.1 percent in 2014.
“As a proportion, foreign purchases have been a lot less this time,” said Jefferies Singapore analyst Krishna Guha, while noting that it would be interesting to watch if the ABSD hike does not cool foreign buying.
Jefferies Singapore expects the private primary market, excluding executive condos, to be softer than in 2017 when 10,862 units were sold by developers. The private resale market, on the other hand, is expected to be better than the previous year, when about 14,000 units were sold. This comes as 8,366 resale units were transacted in the first half of 2018 alone.
Guha predicts an excess of project launches this year and in 2019, considering that only 10 of the 60 projects successfully sold via en bloc sale since 2016 have been launched as of June. The other projects, with a pipeline of 13,000 housing units, are expected to be launched in H2 2018 and 2019.
“Given the cooling measures, developers may have to temper margin assumptions and reconfigure project specs and construction costs,” he said. “In our view, it may also lead to more competition among industry stakeholders.”
More: Can you afford a condo? Check your affordability now.