Despite the price inflations in the third quarter, speculative activity in the private housing market during the same period dropped to its lowest level in the last two years.
Urban Redevelopment Authority (URA) data showed yesterday that the number of sub-sale transactions fell by nearly 20 percent in the third quarter compared with the second quarter.
Being a part of total sales, sub-sales also dropped to their lowest level since 2007, comprising only nine percent of the total home sales in Q3 as compared to 13 percent in Q2 and over 16 percent the previous year.
Sub-sales transactions, which are considered to be the most commonly used alternative of property speculation, happen when a buyer purchases a new home and immediately sells it before it is built.
The number of such transactions is said to be a closely watched measure of speculation in the market since the original buyer does not hold the property long enough and just sells it out.
According to property consultants, one main factor attributed to the decline of sub-sales transactions during the third quarter is the measures introduced by the government aiming to cool the exuberance in the market.
Even before the measures were officially announced on September 14, the government had already indicated that it would intervene in the market.
Nicholas Mak, Ngee Ann Polytechnic real estate lecturer, noted that sub-sales had increased sharply during the second quarter, tripling to more than 1,309 transactions, but then they fell across the whole market in the following quarter – indicating that home sales in the period were largely triggered by real home demand.
As the government intervened, the overall sub-sale levels are more likely to stay low, between five and ten percent of the total sales, said Mr. Mak.