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Property agents report more enquiries from home sellers

Jittery owners wonder if they should sell before prices dip

Published on Jan 14, 2012

By Esther Teo, Property Reporter


PROPERTY investors are facing a test of nerves more than a month after tough new cooling measures were introduced.

Since the Dec 7 announcement, a stream of negative reports have surfaced, with the most dire predicting a nosedive of up to 30 per cent in home prices.

Agents say they have been getting more calls from jittery clients worried about the impact the measures and global economic uncertainty will have on prices.

They wonder if they should sell quickly while prices are still at high levels.

However, agents feel confident that panic selling is unlikely as bank deposit rates are still low and investors still see property as a better place to park cash.

They add that the higher level of inquiries might also be a knee-jerk reaction and that the market might settle down after the shock of the measures passes.

Still, another factor causing some anxiety to owners of mass market homes is the bumper supply of suburban land released by the Government.

The continued strong supply of executive condos (EC) sites - a public-private housing hybrid - is also of concern as it appears set to siphon demand away from the private market. The Government has indicated it is ready to supply sites for up to 5,000 EC units this year.

Experts say owner-occupiers are less concerned about price fluctuations, given they are likely to stay put in their homes.

But property investors are mulling over whether to exit their investments while private home prices are still at record highs - at least on paper - based on the latest Urban Redevelopment Authority (URA) price index.

This is especially so for investors who bought their residential property before a seller's stamp duty of up to 16 per cent was introduced in January last year.

Private home prices, which defied gravity with a 24 per cent gain over the past two years, finally seem to be close to their zenith, inching up just a smidgen in the three months to December.

Flash estimates released by URA last week showed prices rising just 0.2 per cent in the fourth quarter last year, down from a 1.3 per cent gain the quarter before. Experts say a price fall could show up as early as the first quarter's URA price index.

The Dec 7 measures included a steep 10 per cent additional stamp duty on foreigners buying homes. One report by Standard Chartered predicted prices could fall up to 30 per cent as a result. Other reports also flagged possible falls.

Global Property Strategic Alliance associate cluster head Charles Tan said his team has received about 20 per cent more calls from concerned investors looking to offload investment properties than before the Dec 8 measures were introduced.

However, sentiment on the ground is mixed. While some are keen to sell and might be willing to accept a slightly lower price, others see no urgency as yet and have remained firm on their asking price.

'As long as rental yields are reasonable and cover the loan amount so that the owner has a positive cash flow, some investors are willing to hold on to their properties as long as cost of funds remains low. They believe that Singapore is a real estate safe haven, there are not many better choices for them to park their money,' Mr Tan added.

Similarly, Dennis Wee Group senior group director Patrick Tan said that he has received a 10 per cent increase in inquiries from clients asking if they should cash in on profits before the market dips.

Still, most are taking a wait-and-see attitude, hoping to get a clearer indication of where prices are headed before making a decision, he said.

Mr Steven Tan, OrangeTee's managing director, said the firm has also fielded more inquiries since the measures, though again this has yet to translate into more sales.

'Owners are more willing to negotiate now but there won't be a sharp drop in prices because most have strong holding power. Job prospects remain good, the unemployment rate remains low and interest rates are still at an all-time low, so few are really eager to sell yet,' he added.

ERA Realty Network marketing manager Andrew Phee said some clients are also considering selling their home and renting another temporarily till prices fall.

'I believe the current measures will only create a knee-jerk reaction that may cause a slight correction, but prices can still grow in the long term,' he added.

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