The impact of the cooling measures implemented by the government in August 2010 and January 2011 have become clear from the Q1 2011 flash estimate results released by the Urban Redevelopment Authority (URA) and Housing Development Board (HDB).

The URA’s Price Index and HDB’s Resale Price Index (RPI) have recorded minimal respective increases of just 2.1 percent and 1.6 percent quarter-on-quarter. These were mainly attributed to the government’s cooling measures, which include reducing the loan-to-value (LTV) ratio on additional mortgages to 60 percent and increasing the seller’s stamp duty (SSD) to up to 60 percent.

“The cooling measures have effectively stamped out short-term speculation in the property market,” said Mr. Mohamed Ismail, Chief Executive of PropNex. “We are now seeing a higher percentage of home purchases made by genuine homeowners or investors with a mid- to long-term view.”

While PropNex data reflects a 5.1 percent increase in the number of HDB resale transactions quarter-on-quarter for the first quarter, the cooling measures have resulted in a staggering 33.7 percent decline in the number of private property transactions.

Mr. Li Hiaw Ho, Executive Director at CB Richard Ellis (CBRE) Research, also noted that the private residential price index for the first quarter climbed by 2.1 percent, compared with 2.7 percent and 2.9 percent in Q4 and Q3 2010 respectively.

“The declining rate at which home prices were climbing shows that the market is responding to the property measures,” he said. “The slowdown was also reflected in the sales momentum of new launches where an estimate of 3,200 to 3,400 was sold in the first three months of the year. Although this is 20.0 percent to 25.0 percent lower than the 4,241 units sold in the fourth quarter of 2010, it was still a very healthy volume.”

Meanwhile, Q1 prices of non-landed private residential properties rose 0.9 percent in the Core Central Region (CCR), 2.2 percent in the Rest of Central Region (RCR) and 3.1 percent in the Outside Central Region (OCR).

Mr. Li said that this could be supported by “projects like Waterfront Isle (median price S$990), The Lakefront Residences (S$1,050 psf) and The Tennery (S$1,200 psf) which also registered a strong take-up during the quarter.”

“These projects attracted homebuyers mainly because of their proximity to either an existing or future MRT station. Part of the increase could also be attributed to landed home prices which are still on the rise because of the smaller supply.”

Mr. Ismail expects the private property price index to increase by eight percent this year, with the OCR leading with 10 percent growth and the RCR and CCR price indices increasing by eight and one to three percent respectively.

In addition, the cooling measures may have pushed many HDB upgraders out of the mass market, forcing them to upgrade within the HDB market.

This may have resulted in the number of HDB resale transactions conducted by PropNex rising 5.1 percent quarter-on-quarter, despite the minimal 1.6 percent increase in the RPI.

However, Mr. Ismail said that now is the best time to buy a HDB resale flat. “Cash-over-Valuation (COV) levels have bottomed out,” he said, referring to an overall median COV of S$20,000 for PropNex’s Q1 2011 transactions.