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Singapore braces for further curbs after record home sales

More homes changed hands in March than ever before, and values hit new high, raising spectre of eighth set of measures to rein in the market

PUBLISHED : Wednesday, 17 April, 2013, 12:00am
UPDATED : Wednesday, 17 April, 2013, 5:31am

Singapore's March home sales rose to a record as more developers started marketing new residential projects, raising concerns the government will introduce yet another round of cooling measures to tame property prices.

Home sales rose to 2,793 in March, rebounding from a 14-month low in February and the highest since the Urban Redevelopment Authority started releasing the information in June 2007, according to data released today. Sales in February slumped to 712 units, the data showed.

Prices climbed to a record in the first quarter, according to government data on April 1.

The latest property cooling measures in January, the seventh round of curbs in about four years, included an increase in the stamp duties for homebuyers of 5 percentage points to 7 percentage points.

"Its definitely the pent-up demand," said Nicholas Mak, the Singapore-based executive director at SLP International Property Consultants.

"There is also concern that the government could introduce more cooling measures" after the March home sales data, he said, adding that he expects sales to decline this month.

The country's private residential property price index rose 0.5 per cent in the three months ended March 31, the slowest pace in three quarters, according to preliminary estimates released by the authority.

D'Nest, a condominium project in the northeast of the city state, sold 699 of 800 units it put up for sale, while buyers bought 238 units at Sennett Residence, and 348 at Urban Vista in the east, according to the government data.

"The buyers have come back with a vengeance," said David Neubronner, national director at broker Jones Lang LaSalle's residential project sales in Singapore.

"If sales continue at this pace, there is a very high likelihood of an eighth round of measures," he added.

Sales slumped in February because the city's businesses were shut on February 11 and 12 for the Lunar New Year holiday.

The curbs in January also included higher taxes on permanent residents when they buy their first home, and for Singaporeans starting with their second purchase.

Home sales reached 22,699 in 2012, based on the government data that dates back to 1996.

Singapore also plans to raise taxes for luxury-home owners and investment properties.

The higher tax will apply to the top 1 per cent of homeowners who live in their own residences, or to 12,000 properties, Finance Minister Tharman Shanmugaratnam said during his budget speech on February 25.

He said three days later in an interview that the property market was still "in a wrong part of the cycle".

The government tightened loan-to-value limits for buyers seeking a second mortgage. The cash down payment will rise to 25 per cent from 10 per cent starting from the second loan, it said.

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.

Earlier steps taken to ease the market included imposing additional taxes on foreigners and companies buying properties, and moving to curb the trend of so-called shoebox apartments.