http://www.businesstimes.com.sg/arch...-2004-20140123

Published January 23, 2014

Secondary-market deals at lowest level since 2004

Fall partly attributed to higher cost of replacing properties under new measures

By Kalpana Rashiwala [email protected]


[SINGAPORE] The number of private homes changing hands in the secondary market halved from 15,678 units in 2012 to 7,695 units last year - the lowest volume since 2004, when 6,476 units were sold, according to a caveats analysis by DTZ.

Last year's drop in secondary-market transactions - comprising resale and subsale transactions - was much larger than a 31.3 per cent slide in the number of private homes sold by developers in the primary market to 13,372 units.

DTZ attributed the steeper decline in secondary-market transaction volumes of private homes partly to the fact that those who own multiple properties may not be in a hurry to sell their properties, "as their replacement cost is now higher, with the higher additional buyer's stamp duty (ABSD) and the permanent and structural total debt servicing ratio (TDSR) framework in place", said Lee Lay Keng, head of Singapore research at the property consulting group.

"Furthermore unlike developers, individual owners are less able to offer incentives or discounts to entice buyers," she added.

Another factor contributing to the smaller decline in primary-market purchases, according to DTZ's South-east Asia chief operating officer Ong Choon Fah, is that buyers tend to gravitate towards more lifestyle-driven projects which developers are offering.

"An advantage of picking a unit in a new project over an older property from the secondary market is that developers are minting smaller units these days, which makes the lump-sum price more affordable," she said.

DTZ's analysis is based on caveats data for private homes (excluding executive condos) in the Urban Redevelopment Authority's Realis system. All told, 21,067 private homes were transacted last year across primary and secondary markets, down 40.1 per cent from the 35,154 units in 2012.

The proportion of private home buyers with HDB flat addresses was about 44 per cent in 2013, similar to 2012. Looking ahead, this is expected to fall as the HDB resale market is also experiencing lower transaction volumes and softer prices.

"This affects the ability of HDB flat owners to upgrade or buy a private residential property for investment," said Ms Lee.

"Nevertheless, there will be a group of people sitting on capital appreciation for their HDB flats which they may have bought some time ago and who have enough funds - whether in their CPF savings or cash - to make the jump to the private sector," said Mrs Ong.