PRIVATE residence purchases rose in 2012 primarily due to increased demand from public-housing dwellers, according to the latest studies by DTZ Research and R'ST Research, with data from the Urban Redevelopment Authority.
According to R'ST Research, 17,590 of the 36,887 private residence transactions across all markets last year, or 48 per cent, involved buyers with HDB addresses. This marked a sharp increase of 17 per cent from the number of such transactions in 2011.
The increase in transactions largely took place on the primary market. According to DTZ, the primary market was the only market to see both quarter-on-quarter and year-on-year sales growth, of 12 and 20.7 per cent respectively.
The number of transactions rose despite cooling measures last October that capped mortgage loan terms.
The popularity of private homes was driven by various factors, but largely low interest rates and housing aspiration led.
- Ong Kah Seng, director at R'ST Research
Ong Kah Seng, director at R'ST Research, attributed the increase in private residence transactions to two main causes. He said the popularity of private homes "was driven by various factors, but largely low interest rates and housing aspiration led".
Looking forward to the private housing market in 2013, the studies predicted that transaction volume would likely fall in the short term, due to cooling measures introduced in January this year.
When asked why this round of cooling measures would dampen transactions when the one in October did not, Lee Lay Keng, head of Singapore Research at DTZ, said that a higher additional buyer's stamp duty (ABSD) and tighter financing restrictions might cause buyers to "adopt a wait-and-see attitude before committing to any purchases".
Mr Ong also felt that private residence sales would be "moderated" in the short term. However, he was confident that transaction volumes would remain strong as "policy-sensitive" HDB dwellers rush to purchase private properties before new property restrictions are implemented.
"Some opportunistic HDB upgraders may be aware that as of now, there isn't any restriction on Singaporeans holding both HDB flat and private residential property, but if demand continues to soar unabated in the year ahead, there may be a necessity to regulate such property ownership, for instance, to disallow (new) Singaporean HDB upgraders to continue owning an HDB flat after buying a private home," he said.
He added that the "low interest rates in this environment are still very supportive of private residential property purchases".
If anything, measures such as the increased ABSD would have the greatest impact on the prime segment of the market.
Both Ms Lay and Mr Ong said that the more suburban and mass-market properties should remain affordable.
However, rental yields for private properties, especially condominiums, are less secure.
Mr Ong said that "those who buy suburban condominiums in 2013 will have to actually compete with many completed condominiums in the same vicinity when their homes are eventually constructed", leading to a slight compression of yields to about 2-3 per cent.
This might make such properties less attractive for those looking for a high-yield investment, he said.
