Analysts believe that lower interest rates will alleviate the financial burden on buyers and help attract more buyers back into the market. However, while the interest rate cut may boost market confidence, other factors such as Additional Buyer's Stamp Duty (ABSD) could still limit the growth of transaction volumes.

Currently, housing loan rates have dropped from a high of over 4% to around 3.2%. With the impending interest rate cut, mortgage rates are expected to decrease further. This will enable buyers who temporarily delayed their home purchase plans due to high-interest rates to afford more substantial loans and increase their housing options. However, policies like ABSD remain crucial considerations for buyers, and transaction volumes are not expected to increase significantly.

Taking a 2 million SGD private residential property with a 75% loan as an example, the difference in monthly payments between a 4% and 3% interest rate could be nearly 800 SGD for a 25-year loan term.

Therefore, the interest rate cut is undoubtedly good news for buyers, enhancing their purchasing power and choices. However, apart from interest rates, economic conditions and real estate market regulations also impact buyers' decisions.

Based on the trend analysis of the past five years, a decrease in interest rates typically stimulates an increase in market transaction volume. While unfavorable factors like geopolitical issues still exist, the local economy is expected to gradually improve, boosting confidence among homebuyers. It is anticipated that more buyers will enter the market in the second half of this year, with a focus on owner-occupied properties.

The primary reason for the current decline in buyers is the increase in ABSD taxes, and an interest rate cut may not necessarily prompt more investors to re-enter the market. Additionally, while property prices are still rising, rental rates have ceased to increase, resulting in a decline in the rental yield, making private residential purchases relatively less attractive.

Regarding the expected decrease in mortgage rates, local banks may have already factored in some of the rate cut, so the reduction in mortgage rates may not align entirely with the extent of the U.S. Federal Reserve's interest rate cuts. Analysts predict that floating interest rates for mortgages may decrease to between 3.3% and 3.6%, while two-year fixed rates may drop to 2.5% to 2.7%.

The high-end private residential and mass-market segments may benefit the most, as buyers in these categories typically rely on loans. For the resale market, the interest rate cut may have the most significant impact, as resale buyers need to bear the entire monthly mortgage payment.