The price consciousness was evident as home purchases above $2m crashed from 20.7% to 14.7%.
Local home buyers turned to cheaper non-landed residential properties in Q2, according to a report from Edmund Tie & Company, after the government’s surprise cooling measures in July hit their ability to finance their home aspirations.
The number of non-landed home purchases by Singaporeans surged 36.3% to 4,722 after three straight quarters of decline, which might suggest heated take-up despite the cooling measures which saw the Additional Buyers Stamp Duty (ABSD) rates for individuals being hiked by 5 ppt and 10 ppt for entities whilst Loan-to-Value (LTV) limits tightened by 5 ppt.
A closer look, however, would surface that the property purchases are more calculated to fit within limited budgets as ET & Co notes that the majority (40.5%) of property purchases were within the range of $1m to $1.5m.
This was followed by 24.8% of purchases which were less than $1m and 20.1% of purchases which were in the $1.5m to $2m range. Only 10.1% were in the $2m to $3m range, 2.9% for the $3m to $4m and a measly 1% snapped up properties greater than $5m.
“The more affordable quantum for certain projects led to relatively healthy take-up rates even after the implementation of the cooling measures,” observed ET & Co.
Correspondingly, locals shunned costlier home purchases as the proportion of home purchases priced $2m and above declined from 20.7% in Q2 2017 to 14.7%.
In terms of location, Singaporeans continued to embrace projects close to transportation nodes and commercial clusters whilst keeping price considerations in mind. This includes projects like Twin View, The Tapestry, Park Place Residents at PLQ, The Verandah Residences and Margaret Villey.
The same cautious take-up trend can be observed with foreign homebuyers even as the number non-landed home purchases by Singapore Permanent Residents (SPRs) and Non-Permanent Residents (NPRs) rose 7.7% QoQ to 1,354 units in Q2 with SPRs accounting for 995 units and NPRs for 359.
“Foreign demand for residential properties remained relatively strong due to the stability of Singapore’s economy and restrictions on foreign ownership of residential properties in other markets such as New Zealand and Australia,” added ET & Co.
Mainland Chinese buyers accounted for the lion’s share of foreign residential purchases in Q2 where most home buys were in the $500,000 to $1.5m range.
“However, with the implementation of the cooling measures, foreign sales are expected to decline in the short term as foreign buyers need to pay a larger Additional Buyer’s Stamp Duty (ABSD) for their home purchases, added ET & Co.
Demand for residential property over the coming months is likely to come from first-time buyers who are less exposed to the cooling measures. Homebuyers will have a wide list of options to choose from with a robust pipeline including Treasure at Tampines, Riverfront Residences, Parc Esta, Stirling Residences, Jadescape, Parc Colonial and Whistler Grand.
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