Overall in 2014, the private residential sector has seen declining transaction volumes and prices softening. The number of properties put up for mortgagee sale is on the rise and developers still had to contend with a high inventory of unsold units.
It is likely that the government will relax some of the cooling measures once the residential property prices start declining by 10% or more, or if the number of mortgagee sales continue to climb.
There is a general expectation that the government will tweak the additional buyers’ stamp duties (ABSD) as this has largely delayed foreign buyers’ and investors’ purchasing plans. However, there is no foreseeable change to the existing Total Debt Servicing Ratio (TDSR) framework and loan to value as it continues to keep buyers from being financially over-stretched.
With prices tumbling into an acceptable range, long-waited buyers and investors are starting to open up their purchasing options, eagerly stepping into the market in search for the best suited opportunities, especially in the luxury segment. Buyers generally think the current market condition may increase developers’ risk of poor sales, hence they might be more willing to offer attractive incentives to move sales.
Rental yield is likely to remain weak as more projects will be completing over the next two years, giving rise to oversupply and competition. Buyers need to adopt a realistic approach and ensure their financial position remains reasonably sound as to allow their investment to ride through the long cycle.
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