Rise of the first-time home buyers!

First-time home buyers have been propping up demand in the local property market.
They are not affected by the latest cooling measures implemented in January since they belong to the group without a mortgage loan.

24-year-old Travis Ye became a condo owner for the first time in September last year, when his parents put down a 30% downpayment for his $1.4 million condominium at eCo.
That's when the sixth cooling measure had been in force for nine months, raising fears of more policy risks.

First-time property buyer Ye said: “Yes, there was a rush. A lot of people now are so afraid that my money today can buy this property. But with all these cooling measures and X amount of money, you cannot really buy a property because of the lower loan tenure, your bigger downpayments, your money shrinks in a way.”

Yet, Mr Ye remains confident that rental income from his three-bedroom unit at eCo in Bedok can generate positive cash flow even after paying off monthly mortgages.

But the fresh graduate will have to top up his loan repayments should interest rates rise above 3.5% per annum.

Some market watchers observed mortgage rates have been rising in the last three months. But some analysts said with Singapore's economy and high employment rate, first timers should be able to meet their home loan obligations.

And, first timers like Mr Ye have kept primary home sales moving.

Developers that launched new projects after the seventh round of cooling measures on 12 January, said at least 1 in 2 buyers don't have an existing loan to service.

Launched on 15 March, 60% of units at D'Nest were bought by those who have not bought a home before.

At Q Bay Residences, that was launched about a week after the latest round of cooling measures, 53 per cent of buyers were first-time property owners.

Developers Channel NewsAsia spoke to said they do not have statistics on first-time owners prior to cooling measures. CapitaLand does not have such statistics.

Analysts also said that the decline in private home sales in February was mainly due to lower demand from investors.

Sale of new private homes in Singapore fell sharply in February - to 708 units, down by nearly 65% from January.

CEO of DistriCT65, Colin Tan said: "I would say that when the developers say that first-time buyers make up more than half of buyers, it is probably not an increase in first-time buyers. It is a decrease in second time buyers or mature buyers - those who have an existing loans. That is why you see the percentage increasing for first-time buyers."

For now, first-timers should prop up the property market.

Deputy MD of Colliers International, Grace Ng said: "For the rest of 2013, demand will be sustainable because first-timers are coming out in force. They are taking opportunity to buy well-located condominiums in view of the various discounts given by the developers."

March has been tipped to be the top month for new home sales in 2013. From the four recent launches, analysts are expecting nearly 2,000 units to be sold last month - surpassing 708 units sold in February.

Source: Channel News Asia

Our take: First-time home buyers will continue to prop up demand.... as long as there's enough of them with rich "backings".