Despite the challenging global economic situation, Singapore’s AAA rating protects both property sellers and buyers, according to a Savills report on the residential market.
The report echoed the Ministry of Trade and Industry’s cautious growth outlook for 2012 which is consistent with an earlier forecast of one to three percent. While primary demand fell in the first two months of the year, Savills said that 12,978 new homes were sold in the first five months while a record 14,272 new homes were launched.
The report added that several private equity funds and boutique developers are partnering to enhance resources for land acquisitions.
However, the large supply has exceeded demand; hence a historical high of 8,245 homes were launched in May but left unsold.
“The median price of resale homes rose four percent quarter-on-quarter while new sales saw a slight 0.7 percent downward correction,” noted the report, adding that high-end home prices tracked by Savills rose by three percent quarter-on-quarter.
Alan Cheong, Director at Savills Research, said: “Although the Eurozone crisis is expected to generate a fair deal of turbulence, the market has put its faith in the increasing population and the view that asset prices here are bullet proof.”
Moving forward, Savills expects developers to expedite project launches ahead of any further economic deterioration. The sales volume (excluding ECs) will likely surge to about 2,300 units in July before dropping to about 1,300 and 1,700 units monthly in the next two months.
“With interest rates at an all time low and the economically active population continuing to increase, any downside risks arising from the global economic problems have been paved over,” added Savills.
In Q3, new home prices will likely hold steady while prices of luxury property could slip by another one to two percent in the coming months.
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