Prices of resale private homes in Singapore climbed 1.5 per cent on-month in May, according to flash estimates of the Singapore Residential Property Index (SRPI) by the National University of Singapore (NUS).
This marked the third consecutive monthly increase in the overall private home market.
While prices rose in all Singapore regions in May, those in the non-central area rose most sharply, by 2.2 per cent.
Prices in the central region were higher by 0.8 per cent.
The index covering small units of 506 square feet and below, otherwise known as shoebox apartments, rose by 0.9 per cent, after a 0.8 per cent decline in April.
Source: Channel NewsAsia – 28 Jun 2012
I think the index is not an accurate reflection of the market situation simply because, by its very nature, properties are not a commodity (like wheat, gold, oil) whose price-performance can be evenly tracked and data-processed. Properties vary in unit-prices (psf) due to a variety of reasons, such as locality, size, land tenure, age and interior quality etc. Furthermore, developers complicate pricing by offering freebies like furniture vouchers, country club membership, absorption of stamp duty etc instead of giving outright discounts.
So, a variation in the property-index, say +/- 1% is meaningless insofar as its accuracy or implication is concerned. This should be better regarded as stagnant market. I think, the index is useful only in reflecting big picture, say a cumulative price movement exceeding 5%, otherwise, the market is regarded as in whipsaw.
Apart from this, like all other indices, there is also the volume factor not accounted for yet. Example, what is your take if the price rose +0.4% last quarter but volume fell 25%? Is the market bullish or bearish?