Private home prices will likely see a five percent decline in 2011 but will be mainly stable, said a new report released by property consultancy firm DTZ Research.
The recent cooling measures announced by the government will likely reduce sales volumes but will not cause a substantial decline in prices, it said.
Sales volumes will likely drop, as short-term speculators will be discouraged by the seller’s stamp duty (SSD) of up to 16 percent within the first year of acquisition. Not all investors, however, will abandon the market, as some may still find the four percent SSD to be surmountable. They could focus on buying uncompleted units to be completed three to four years later, said DTZ.
Prices this year will likely be supported by economic growth, developers’ strong holding power, low interest rates, Singapore dollar’s appreciation and inflow of foreign purchases due to the clampdown of the real estate market in Hong Kong and mainland China.
Landed homes and small and high-end apartments will be less affected by the measures, said Margaret Thean, Executive Director for Residential of DTZ.
“Small units with their low price quantum will continue to attract investors with spare cash or singles wanting their own units. The four-year seller’s stamp duty will have little impact on landed homes, as most purchase them for long-term owner-occupation and high-end apartments will continue to see foreign interest,” said Ms. Thean.
DTZ, however, does not eliminate the possibility of more government measures if demand stays at a high level following a cooling off period.