Singapore home sales rise 43pc in wake of cooling action

Singapore home sales rose 43 per cent last month as buyers rushed in after the government announced cooling measures to ease prices.

"This is a bit of an abnormality and the increase was a bit of a surprise," said Nicholas Mak, executive director at SLP International Property Consultants. He said developers had extended office hours on the eve of the curbs.

"February will be lower than January because this is when the effects of the cooling measures will be felt," Mak said.

Singapore home prices reached a record high in the fourth quarter amid low interest rates, raising concerns of a housing bubble and prompting the government to introduce its seventh round of cooling measures.

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.

Mak said the curbs were also partly offset by price cuts by developers, some offered through rebates.

He expects prices for so-called mass-market homes to increase between 1 per cent and 5 per cent this year.

For high-end homes, or those in prime districts, prices may rise 2 per cent or decline as much as 8 per cent depending on buyers' reactions to the measures, Mak added.

Singapore's property index has risen to the highest in almost five years. The measure has climbed 2 per cent since the curbs were announced last month, recovering from a 1.6 per cent decline on the first trading day after the measures.

Knight Frank cut its estimates for new home sales for 2013 by 20 per cent after the measures and expects sales to range between 12,000 and 14,000 units this year.

"Despite the strong sales volume in January, there could be a potential decline in demand for private homes for the next two months in first quarter this year by about 10 to 15 per cent, as the private residential market fully absorbs the impact of the seventh round of property cooling measures," property broker, Knight Frank, said.

The latest measures include an increase in the stamp duty for homebuyers of between 5 percentage points and 7 percentage points, with permanent residents paying taxes when they buy their first home.

Singaporeans will also have to pay the levy, starting with their second purchase.

The government also 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 payment will also rise to 25 per cent from 10 per cent starting from the second loan, it said.