Tuesday, July 5, 2011

Singapore property cooling measures are taking effect

It seems like Singapore governments anti property speculation measures (property cooling measures) are taking effect while taking their toll on the HDB resale market. According to Mohamed Ismail, Chief Executive of PropNex, the jump in HDB resale price as well as COV (cash over valuation) is a sign:

"Buyers who took 1Q11 to understand the cooling measures announced on 13 January 2011, especially the lower 60 percent Loan-To-Value ratio and revised Minimum Occupation Periods, have come back to buy on the resale market. However, there are still many owners who, due to the cooling measures, are reluctant to move or sell their flat, resulting in a supply crunch and driving median resale prices as well as COV levels up."
Source : Property cooling measures taking effect, says PropNex CEO

Mohamed Ismail thinks current ultra high Cash-Over-Valuation figures (28,000 to 45,000 SGD) are not sustainable but in the short run they will go up further before coming down. COV is cash you pay the owner over the price of the HDB. Since it is cash and cannot be satisfied from CPF or loan, it greatly effects affordability and its level show the demand versus supply.

If cooling measures are effective why the prices in all segments are further going up instead of falling? First of all cooling measures are effective, if they were not implemented we would see crazy price gains in all segments instead of current levels. Second the wind blowing to rise prices is still very strong, interest rates are low, mainland Chinese are crazy to create their version of property bubble around the world and there is a severe supply crunch due to under-construction of last decade. Third kiasu is very hard to overcome. Your friendly property agents are out there singing the same song: "Buy now or watch the prices go out of your reach with regret".

See also New Singapore property cooling measures Targeting non resident foreign investors

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