Multiple Unit Buys Should Be Tracked

Sources : The Business Times, July 17, 2007

This would indicate level of speculative activity, says Colliers International

COLLIERS International has suggested that the authorities track multiple-unit purchases of private residential properties, which could be used to show the level of speculative activity.

Individuals who own several properties may dump them if the market softens and this exercise could potentially accelerate any property downfall, the property consultancy argued.




'If the market drops, and these buyers want to let go of their units ... and that will further accelerate any price downfall.' - Colliers' Ms Tay







Colliers' director for research and consultancy Tay Huey Ying, said: 'So far, the government has been giving details on the number of subsale deals - which refer to secondary market transactions for projects that have yet to receive Certificate of Statutory Completion and are often seen as a proxy for speculative activity. That's useful information.

'But in addition to that, perhaps the government may also want to monitor and see the extent to which people are buying several units or even floors, particularly at new residential property launches, as that may also reflect an intent to speculate, that is, buying units with the aim of flipping them within a short period of time.'

When contacted, a spokeswoman for the Ministry of National Development said: 'The Urban Redevelopment Authority does not monitor multiple purchases by individuals. However, the government is monitoring the property market closely, to ensure that it remains healthy and sustainable.'

Ms Tay said that in addition to tracking multiple-unit buyers as a lead indicator for future speculative activity, there could also be other potential implications of such buying activity.'If the market drops, and these buyers want to let go of their units, we could see many units on the market, and that will further accelerate any price downfall,'she said.

Ms Tay said she was more concerned with individuals who buy multiple units rather than than institutional investors like funds which make such purchases, since corporate buyers typically have greater financial muscle and are looking at holding their assets for rental income over a longer timeframe. 'Individuals are more likely to lack the financial muscle to hold on to their purchases if the market softens,' she said.

In addition to tracking those who buy multiple units or floors in the same development, Ms Tay also observed there were many individual investors who have been buying units across Singapore. 'That also deserves monitoring,' Ms Tay added.