Property developers will likely see a sharp drop in sales volume to the 500 – 800 unit range in the first two months of 2011, as market players re-evaluate their position after the harsh round of cooling measures announced last week.
A moderate rebound in sales volume may be seen when the latest wave of property measures announced by the government has been absorbed and industry players start to take position again, said real estate services company Colliers International in a statement.
Demand for homes will still be supported by the four to six percent economic expansion projected for 2011, the low interest rate environment and ease of credit, as well as the significant amount of liquidity floating in the market.
Demand will also be underpinned by the possible continued diversion of funds from Greater China into the Singapore real estate market and the sustained inflow of hot money expected from the West.
“Nevertheless, with market players limited mainly to genuine home buyers and cash-rich mid- to long-term investors as a result of the latest set of cooling measures, developers’ sales for 2011 should slide from 2010’s high of over 16,000 units to in the region of 10,000 units,” said Tay Huey Ying, Director of Research and Advisory at Colliers International.
However, she noted that strong sales volume is likely to be achieved on the back of a steadier price growth with estimates ranging from five to eight percent for 2011, down from last year’s preliminary estimate of 17.6 percent.
“The easing of market exuberance amid sizeable supply given the bumper crop of State land sales in 2010 should reduce upward pressure on price and may even result in the softening of prices for mass-market properties,” said Ms. Tay.