The recent hike in the top marginal rate of the buyer's stamp duty and the sky-high amounts developers are paying for land could send prices up at new projects.
But while the stamp duty hike may "add some friction to transaction volumes" as buyers are still price-sensitive, it is unlikely to derail the recovery, said Mr Augustine Tan, president of the Real Estate Developers' Association of Singapore (Redas), yesterday.
He told around 620 guests at the Redas annual Spring Festival lunch: "The property market is in the early stages of a recovery and positive buying sentiments are likely to continue. Barring unforeseen circumstances and on the back of a stronger-than-expected economic growth outlook in Singapore, sale momentum of 2017 is likely to carry through to the next few years."
He added that properties here are relatively affordable compared with those in cities like Shanghai and London. Citing JLL research, Mr Tan said it took 4.8 or five years to afford the average price of a home in Singapore in 2016, compared with 14 to 15 years in Shanghai and Beijing, and 81/2 years in London.
Monday's Budget raised the buyer's stamp duty rate on the portion of a residential property's value that is in excess of $1 million. The existing 1 per cent to 3 per cent rates still apply to property values of $1 million and below.
The change affects all homes bought on or after Tuesday, including collective sale property deals and residential land sales.
It comes amid a property market recovery after a price slump of more than three years. Private home values rose 1.1 per cent last year after falling by 3.1 per cent in 2016 and 3.7 per cent in 2015. Developers saw a 33 per cent jump in private home sales last year to 10,566 units.
Second Minister for National Development Desmond Lee, who also spoke at the Redas lunch, agreed that there is renewed confidence in today's property market, but he noted that the number of residential units for sale is expected to more than double in the next few years.
About 19,000 units remained unsold as of the end of last year.
Mr Tan estimated that a further 34,495 private residential units could be available for sale in 2018 and 2019, based on land sale sites that have yet to be granted planning approvals and those that can be generated from the government land sales programme in the first half of this year. Meanwhile, there are still 120 sites at various stages of preparation for collective sales.
"Assuming the estimated 5,125 displaced owners from collective sales do not downgrade to public housing and analysts' forecast of 13,000 sale transactions for 2018 (holds true), the overall unsold inventory and new supply represents four years of demand," he said.
Mr Tan noted that the susceptibility of Singapore's economy to external demand warrants a close look at the structural challenges in the global environment and investment behaviour that will pose risks to market stability in the long term.
He said moderating growth from late-2019 amid rising global interest rates and a slower business cycle will affect real estate business sustainability and Singapore's real estate growth. "With land scarcity in Singapore, there may be a need for more mixed-use developments with higher density," Mr Tan noted.