Private property prices expected to grow at slower pace after cooling measures

Following July’s new property cooling measures, industry analysts have revised their projection for this year’s private property market performance.

Mi Casa. Picture: iProperty

Growth of private residential property prices may be capped

A cap in this year’s growth is expected as most buyers looking to invest in their second or subsequent property may be deterred by the higher Additional Buyer’s Stamp Duties (ABSD) and stricter loan limits. Analysts are now looking at 8% to 12% rise in private home prices this year.

While they may hold back their investment plans, some buyers could still bite should developers dangle offers which are attractive enough.

Properties with good value propositions such as a good location may still attract buyers. Buyers will be watching upcoming launches closely to see if developers offer slightly lower launch prices.

However, developers who have purchased land at high prices in the past year or so may not be willing to sell at lower prices as they risk suffering a loss.

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Rental market may grow slightly due to lower vacancy rates

The high-end residential property segment may suffer the steepest decline as analysts now give an estimated 7% to 10% growth in prices, down from the original 8% to 12%.

The rental market, however, is expected to grow, rising 1% in Q2, up from the 0.3% rise in the previous quarter. This could be due to falling vacancy rates as fewer completed units are expected to enter the market in the short term.

9,930 completed private homes (excluding executive condominiums) will hit the market this year, down almost 40% from 2017’s 16, 449 units. Barring any unexpected industry shakeups, private home rental prices may grow 2% and 5% this and next year respectively.