The two most recent sets of property cooling measures announced on 30 August 2010 and 13 January 2011 may have been more effective in controlling the prices of completed non-landed private homes than the two earlier sets of measures implemented in September 2009 and February 2010, according to a study conducted by the National University of Singapore (NUS) Institute of Real Estate Studies.

NUS’ overall Singapore Residential Price Index (SRPI) has climbed approximately 0.19 percent on average per month since the implementation of the January measures. It also grew 0.12 percent on average per month, August to December 2010.

On the contrary, the September 2009 and February 2010 measures were followed by average monthly increases in the SRPI of 1.13 percent and 1.23 percent respectively.

The index includes only completed non-landed private homes.

Based on the Urban Redevelopment Authority (URA) Realis caveats data, the average monthly sales volumes of non-landed private homes — including the transactions in both the primary and secondary markets but excluding executive condos (a hybrid of private and public housing) — fell to 1,391 after the recent 13 January tightening measures.

The monthly sales volume following last August’s measures reached 2,490 units, compared to 2,907 units after the February 2010 measures.

According to a market analyst, “We’re now seeing the cumulative effect of continuing tightening measures implemented since September 2009.”

“The policy interventions sought to tighten leverage and dampen speculative build-up in the housing market,” said Lum Sau Kim, Associate Professor of NUS’s Institute of Real Estate Studies and Department of Real Estate.

“Other than the February 2010 measures, the rate of price appreciation for non-landed private homes and sales volumes have declined following each policy date. However, these declines have been temporary and suggest that other drivers of home price and transaction activity may have overwhelmed the macro-prudential measures.”

According to market analysts, some of the factors that drive interest in the property market, despite the government’s efforts to cool it, include high liquidity, a low interest rate environment, the appeal of property as a hedge against inflation and the diversion of hot money from foreign markets like Hong Kong and China to Singapore’s property market.

“Usually, there will be a knee-jerk reaction every time there is a policy as market participants start to evaluate the likely impact. They want to wait for a while to see what happens and if nothing much happens, they start to enter the market again,” said Ong Choon Fah, Head of Consulting & Research (SE Asia) at DTZ.

“But when these didn’t seem to produce the desired result, they started to address the demand side as well and that’s when we began seeing a more significant impact on the market.”

“And as we start to see all the supply materialising both in terms of marketing of new projects and physical completion of projects launched earlier, reality will hit home. A lot of people bought properties for investment and will need to find somebody to lease them or sell them to.”