SRX private resale data shows early impact from latest property curbs

Resale prices edged up 1% to six-year high; but transaction volume retreats

Wed, Aug 08, 2018

THE latest property cooling measures have begun to hit the private resale market, going by the first market-wide snapshot since the curbs kicked in on July 6.

Real-estate portal SRX Property's flash estimates for July, released on Tuesday, showed that resale prices of condominiums and private apartments rose 1 per cent month on month to a new six-year high; this made for 12 months of uninterrupted rise. Compared to July 2017, resale prices are up by 12.3 per cent, and have climbed 9 per cent so far this year.

More interestingly, there was a bigger-than-expected decline in the volume of transactions and in an SRX indicator called the TOX, which also showed a sharp drop.

TOX stands for transaction over X-value, and is a measure of the amount a buyer is overpaying or underpaying on a property, based on SRX's computer-generated market value.

SRX figures show an estimated 1,085 non-landed private resale units were sold in July - 31 units or 2.8 per cent fewer from the 1,116 units resold in June, and 1.5 per cent lower than the 1,102 units in July 2017.

Nicholas Mak, head of research and consultancy at ZACD Group, noted July's estimated resale volume was about 16.8 per cent lower than the 12-month average (1,304 units) for July 2017 to June 2018, and suggested that the latest property curbs could have been a contributing factor.

"Unlike the residential primary sales market, in which a few developers were able to quickly open their show flats and activate sales agents on the evening of July 5 to capture the last-minute sales before the cooling measures kicked in, a large majority of the individual sellers in the resale market were unable to react as quickly. Furthermore, some of the potential buyers in the resale market could have also hesitated after the sudden announcement of the property market curbs."

SRX's data showed that its overall median TOX fell to a positive S$4,000 last month, a sharp drop from S$17,000 in June.

OrangeTee & Tie's head of research and consultancy Christine Sun said: "The trend may indicate that the price gap between buyers and sellers has narrowed, as sellers are now more willing to negotiate in light of the cooling measures, but not quite ready to offload their units below valuation."

But she noted that while TOX fell in July, it is still in positive price territory. She added that the policies previously put in place have eradicated much speculative buying and prevented families from over-leveraging.

"The market is now limited mainly to genuine home buyers and cash-rich investors," she said. "The resilient nature of the market suggests a still-strong fundamental demand for resale homes, largely for the purpose of upgrading and long-term investment."

Agreeing, Mr Mak said that even after the new cooling measures - the higher additional buyer's stamp duty (ABSD) rates and tighter loan-to-value limits - "some buyers were committed to going through with their purchase, albeit at a higher price, which may have contributed to the price growth. This indicates that the underlying buying demand in the local private residential market is still fairly healthy".

Ms Sun said she expects resale prices in the coming months "to continue to trend upwards albeit at a much slower pace".