Singapore home prices drop in Q4

[Tiggerbee]

Buying a property now is like buying a hot stock that has already peaked. The bid and offer price gap will widen as transaction vol increases in the secondary market. And when the selling vol increases, more people will be willing to transact at lower prices.

Ipos (new launches) have to be priced lower to attract more investors or buyers. With the lock up periods of past ipos coming up (sellers ABSD), there will be more people eager to sell their stocks (properties) invested in 2010-2012. I foresee that the transaction vol will pick up between 2H 2014 to 2015 when prices will fall at a faster pace.

tigerbee buddy, what is that lock up period?

I made a typo error in my earlier mail. I was referring to SSD (sellers' stamp duty). You can find the details on the SSD measures from these 2 links. The SSD penalties act as a form of "self imposed lock up periods" on the buyers.

http://www.iras.gov.sg/irashome/page04.aspx?id=10212
http://www.iras.gov.sg/irasHome/page04.aspx?id=10202

The SSD measure is a double edge sword, it deter shorter term speculators who are in for a quick buck but also deter investors from selling. Investors who bought properties after Jan 2011 are not likely to sell their properties before Jan 2014 to avoid the 8-16% SSD penalty. That's why if you check the URA websites for those projects launched after Jan 2011, you will hardly see any transactions in the secondary market. However, these potential sellers in the 4th year after their purchase are already sitting on unrealized capital gains (as prices had risen about 40% since Jan 2011) might be more willing to take the 4% hit when the property prices decline accelerate. This will increase the number of available for sale properties in the secondary market and exert more pressure on new launches.

The new SSD measure had infact held back potential sellers who had purchased their properties after Jan 2011 and create a pent up selling supply of properties that will start to increase at a faster pace after Jan 2014. And it's not just new launches purchased after Jan 2011, we also need to include the re-sale properties as well. So there's gonna be a lot more available for sale properties from Jan 2014 onwards.