Bank of America (BofA) Merill Lynch cited in its recent report that 20 percent of the total number of private home transactions recorded last year were accounted for by foreign buyers, while PRs and Singaporeans made up a respective 13 percent and 67 percent share.
“This is a big jump from 10 years ago, when foreigners accounted for only six percent. Foreigners are entering the mass market, not just the luxury and mid-market segments,” it said.
According to Tejaswi Chunduri, real estate analyst at PropertyGuru, the latest government cooling measures may result in lesser activity across the high-end to luxury markets, where foreigners are active, therefore leading to an eight to 10 percent decline.
“However, developers might want to provide creative packages to lure more customers,” she said.
“In the mass to mid-market, which is dominated by Singaporeans, prices might stabilise by around five percent. Home buyers in this sector are mainly HDB upgraders, PRs and affluent young executives.”
According to Chunduri, the measures are unlikely to affect the HDB market.
“However, other factors such as raising the income ceiling to S$10,000 and S$12,000 for BTOs and ECs could affect demand in the HDB resale market. Home buyers might shift their focus from the resale market as more Singaporeans are now eligible for BTOs and ECs,” she said.
BofA Merill Lynch noted that there were 6,323 unsold units in the market as of Q3 2011.
“Historically, there is an inverse relationship between growth in inventory and growth in prices. As the pace of inventory accelerates, the pace of growth in prices decelerates,” it said.
Some 25,000 BTO flats will be released in 2012, which might affect demand for resale flats, resulting in a five percent price correction.
