Singapore home prices fell for the first time in almost three years after the government imposed new taxes on house purchases.
The island state’s private residential property price index declined 0.1 percent to 206 points in the quarter ended March 31 from the previous three months, according to flash estimates released by the Urban Redevelopment Authority today. That’s the first drop in prices since June 2009.
“The decline last quarter has been marginal, but it will have a psychological impact on people,” Nicholas Mak, an executive director at SLP International Property Consultants in Singapore, said in a phone interview today. “The rate of decline can increase this quarter but I don’t think it will exceed 1 percent.”
Singapore has been attempting to rein in prices since 2009, when it barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built. Foreigners and corporate entities have to pay an additional 10 percent stamp duty following measures introduced in December.
The FTSE Strait Times Real Estate Index (FSTRE) fell 0.1 percent as of 11:25 a.m. in Singapore trading. City Developments Ltd., the city-state’s second-largest real-estate company, slid 1.1 percent to S$11.23, the first retreat in five days, and Wing Tai Holdings Ltd. (WINGT) lost 1.2 percent to S$1.265.
The extra levy is 3 percent for permanent residents purchasing a second home and for citizens buying their third residential property. The government earlier imposed a 1 percent duty on the first S$180,000 ($142,879) of the property price, 2 percent on the next S$180,000 and 3 percent for the remainder.
In January 2011, the government also raised down-payment requirements for second mortgages and extended the period homeowners must hold their properties to avoid a sales transaction tax to fend off speculators.
Still, home sales rebounded in February to the highest since July 2009, boosted by purchases in suburban areas as some developers offered incentives after the government curbs. Private home sales rose to 2,413 units in February from 1,872 units in January, according to data from the Urban Redevelopment Authority.
Developers are increasing sales by offering smaller units, according to CBRE Group Inc., the Los Angeles-based property broker. The median size of units declined 24 percent to 667 square feet in the quarter ended March from the previous three months while the median price slid 18 percent to S$786,340, it said.
Developers sold about 5,200 apartments in the past three months, the highest since the quarter ended September 2009, CBRE said in a statement on March 30.
“We are seeing good sales in the primary market as developers are holding prices and not competing with each other to cut prices,” Mak said.
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