Real Estate Blog - Singapore Property Market

Singapore’s property market presents plenty of buying opportunities for institutional investors now that it has cooled somewhat.

Buyers waiting for a major price correction will be disappointed.

The Government’s measures to boost Singapore’s population could prop up demand for property and support prices.

So far, no recent transactions by institutional investors have reflected a repricing in the market.

Sellers here have become more realistic and lowered their expectations.

More investors are coming back to look at properties that may have previously been overpriced but are now open to negotiation.

Currently, there are many more people interested in selling Singapore properties than in buying them.

Now, growth funds and some opportunistic investors are pulling out of the plateauing Singapore market, at a time when owners - including banks, foreign firms and opportunistic funds - are becoming more willing to sell.

Interest in Singapore properties remains high, however, especially in the logistics and industrial market.

Commercial assets in Singapore are also in demand to some extent, but the residential sector is likely to turn in a weak performance in the investment market this year.

While repricing is not an apparent risk in Singapore’s property market, the Asia-Pacific region is facing an average repricing of 25 to 100 basis points, or 0.25 per cent to 1 per cent.

Deals of $700,000 and above are still being done this year, after ‘record deals’ of more than $700,000 first surfaced during last year’s boom.

Volume is still healthy as home seekers continue to check out resale flats.

Demand for HDB resale flats comes mostly from newly formed families and new permanent residents (PRs).

Last year, there were about 78,000 new citizens and PRs. So they may be buying HDB flats which they may not have been eligible to buy previously.

High-priced transactions have been registered in a few estates such as Marine Parade, Queenstown and Bukit Merah. For instance, a $750,000 deal for a 10-year-old, high-floor 124sqm unit in Holland Close in Oueenstown was recorded in June.

However, increasingly, potential buyers are feeling the pinch of rising costs and negotiating harder for a smaller Cash Over Valuation amount, particularly for non-prime flats.

For suburban locations, asking levels for COV amounts have come down.

The resale index rose because of higher valuations, which are made based on historical data.

Going forward, HDB resale prices look set to rise, but likely by a smaller margin.

Expect an overall price rise of 10 to 15 per cent, including an 8.2 per cent rise in the first half of this year.

Last year, HDB resale prices rose by 17.5 per cent.

Withdrawal of 1998 Off-Budget Concession on Stamp Duty Deferment

A concession to defer Stamp Duty payment on all contracts was introduced in June 1998 as part of the off-budget measures to cushion the impact of economic slowdown. The concession allows property buyers to pay the Stamp Duty at a later date. For newly constructed properties, the due date is the date of Temporary Occupation Permit (TOP). For completed properties, the payment is due when the property sale is completed.

The Government has decided to withdraw the concession with immediate effect (from 15 December 2006) as the economic conditions and the property market have improved.

With the withdrawal of the concession on 15 December 2006, the normal treatment would apply, that is, a property buyer is required to pay Stamp Duty within 14 days from the date of acceptance of the Option to Purchase.

However, buyers who have accepted their Options to Purchase before 15 December 2006 are not affected by the new rule. They would continue to enjoy the Stamp Duty deferment concession.

As a transitional measure, buyers who accept the Option to Purchase or sign the Sale & Purchase Agreement between 15 and 31 December 2006, will have up till 14 March 2007 to pay the Stamp Duty without any penalty.

These buyers are required to complete and send a prescribed form to the Commissioner of Stamp Duties within 14 days after accepting the Option to Purchase or signing the Agreement. The form is available at IRAS website.