Increased buying spurred sales of developers in July 2009 to an amazing 2,772 units. The figure is more than three times the monthly average sales of 700 to 900 units for the last 10 years.
If the monthly average of more than 1,400 units sold did not make policymakers sit up, the robust sales certainly caught the attention of everyone.
A few attributed the result to pent-up demand, while the government believed it was due to speculations. In September, it announced measures to “temper the exuberance in the market and pre-empt any speculative bubble from forming.”
Developers were disappointed, assuming the measures were a death knell for the fragile private housing market. As the measures were not aimed at investors, instead for pure speculative plays, the effect was more psychological than real.
It is hard to tell if the measures had really worked. Sales in the succeeding months fell, but they would have fallen anyway, with or without the measures.
Many have forecasted even fewer sales with the coming year-end holiday period. However, November’s figures showed a solid 600 units sold. Considering it was a ‘slow’ month, sales received good response despite rising prices.
The actual price increase in Q4 2009 will probably exceed the 7.3 percent estimate last month.
There is no reason why buying will not continue, as it is not the speculators who are buying but the investors, rendering the cooling measures of little impact.
Chinese investors in particular are leading the charge. Many have benefited from the real estate boom in China, and their funds are now flowing into Hong Kong and spilling over to Singapore.
Buying will likely continue unless there are other channels for this massive liquidity. Buying will only falter when authorities start to step in to limit the risks arising from the increased exposure of the banking sector in the property sector.
There are only two possible scenarios for this year: sharp correction or continued healthy growth.