Homebuyers hold off purchases amid hopes of lower prices

More than nine months after the latest property cooling measures were implemented in July last year, homebuyers are still holding off on purchases. “Most people are not buying because they just don’t want to pay the additional buyer’s stamp duty (ABSD),” says Lee Nai Jia, head of research for Knight Frank Singapore.
Generally, people also feel that prices are likely to decline, says Lee. “When people think that prices are going to drop, they tend to give lowball offers.” This is contributing to a decline in sales at new launches so far this year, he says. Based on URA’s latest statistics for new private home sales last month, the take-up rate was the lowest since November 2014.
On stage from left: Boaz Boon, director (real estate advisory) of VestAsia Group; Marcus Chu, COO of ERA Realty Network; Regina Lim, head of research for Southeast Asia at JLL Singapore; and Lee Nai Jia, head of research at Knight Frank Singapore (Pictures: Albert Chua/EdgeProp Singapore)
Lee was speaking at the EdgeProp 360 event “Buying property: Is it the right time?”, organised by EdgeProp Singapore. It took place on April 11 at the Marina One auditorium. Other keynote speakers included Marcus Chu, COO of ERA Realty Network; and Regina Lim, head of research for Southeast Asia at JLL Singapore.
Avalanche of potential upgraders
While the higher ABSD and tightened LTV ratio continue to impact homebuyers’ affordability, property hunters are not putting off buying a new property. “We believe there is pent-up demand building up, and we suspect that it is likely to come back,” says Lee.
Most of this demand will come from HDB upgraders, who have contributed to more than a third of new private home buyers for the past 24 years, says Chu. “From 2019 to 2022, there will be a record number of HDB flats reaching their minimum occupation period (MOP). This means their owners will be eligible to sell the flats in the open market,” he says.
In a sign that HDB owners are selling their properties, the HDB resale volume has been increasing since 2014, from 17,318 transactions to last year’s 23,099 transactions. This segment of buyers is picking up private properties due to the divergence between the price index of private properties and that of HDB properties since 2Q2017, says Chu.
Last year, most of the flats that completed their MOP were in...