The recent property cooling measures have begun to affect the public housing sector, with the HDB expecting a 25 percent decline in the number of resale flat transactions in September compared with the previous month.
Real estate agents are also expecting a decline in cash premiums for resale flats, from an average of $30,000 in the second quarter to between $10,000 and $22,000 by end 2010.
Over the years, the real estate market has been significantly shaped by government policies. While the economy certainly has an impact on sales volumes and home prices, government measures drive them down or push them up sharper and faster.
Government measures are also far-reaching, with new policies for HDB flats often affect the private home segment. Changes in the use of Central Provident Fund (CPF) savings also affect real estate demands further.
With the country’s small market, as well as the presence of active downgraders, upgraders and investors, a single policy usually affects the property industry on several fronts.
Government policies have “quite a significant impact” on the real estate market, said Ong Choon Fah, executive director of DTZ. She compared the market to a pyramid, with private homes occupying the narrow peak, executive condominiums in the middle, and HDB flats making up the broad lower strata.
“Each layer provides the support base for the next,” said Mrs. Ong, adding that the whole spectrum is affected when there are changes in policies at the lower levels.
With the recent property measures, many industry observers are expecting prices to dip or remain flat and property sales volume to decline.
In the resale flat market, cash-over-valuations are expected to slip, said Mr. Jack Chua, president of Hersing. “This would mean lower resale prices by year end, bringing the resale market more in tandem with the pace of economic growth which is expected to be slower in the second half of this year.”
Some analysts are also seeing a decline in prices and sales volume within the private home market.
Mrs. Ong expects that the changes will contain property price increases, stressing that the impact will be gradual and won’t be “something that we will see dramatically overnight”. “Especially if you’re talking about moderation in prices, prices tend to be very sticky on the way down.”