The restriction on developers to re-issue options to purchase (OTP) for the same buyer, for the same unit, within 12 months of expiry, is expected to dampen the private property market, according to RHB Securities.

The tightening measure was announced by the Urban Redevelopment Authority (URA) on Sept 28 with effect on the same date.

According to URA, the restriction is meant to instil a greater financial discipline in making property purchases under the current market conditions.

RHB notes that sales volumes have spiked since the circuit breaker measures were lifted in June.

Private home sales have quickly rebounded to pre-Covid-19 levels, it says.

Monthly sales in August rose 16% m-o-m and 12% y-o-y, bringing year-to-date sales volumes to just 5% below last year’s sales, it points out.

Moreover, there is an increasing number of developers re-issuing OTPs to buyers upon expiry, without the typical forfeiture of booking fees.

Some reissuance of OTPs was driven by buyers’ needing more time to dispose of their existing units, says RHB.

The move has also led to an increase in speculative purchases, with some buyers using the option as a hedge against future price increases, it adds.

“Thus, we believe the recent move is likely to have a slight cooling effect (of a 3-5% decline in demand) in the coming months,” RHB analyst Vijay Natarajan writes in a note dated Oct 5.