Chart of the Day: Home prices dip after ABSD rates rise

But they recover at least five months after the implementation of measures, a report said.

This chart from OrangeTee & Tie shows how home prices fell - alongside sales volume - after announcements of property cooling measures, specifically higher Additional Buyers Stamp Duty (ABSD) rates.

Prices fell after the first round of ABSD. The average price of private condos (all sales types excluding ECs and en blocs) dipped 5% MoM from $1,234 psf to $1,177 in January 2012. Prices dipped another 4% in February 2012, only to recover in the next month.

"In total, prices recovered to their pre-measures level five months later. We observed a similar trend for the second round of ABSD where prices recovered to their pre-measures level after five months," said OrangeTee & Tie head of research and consultancy Christine Sun.

The past trends seemed to indicate that after ABSD, sales volume will fall at a faster rate than prices, Sun added. "However, the fall in prices is usually more prolonged than sales volume."

Sun added that for this current round of ABSD, the effective could be more pronounced and prolonged than the previous two rounds as a "more draconian measure" is in place (i.e. TDSR which was introduced from June 2013).

"Therefore, we foresee that sales will likely dip in the next two months, but may rebound later. Prices of non-landed private homes will stabilise for at least the second half of 2018," she concluded.

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