Prices of non-landed private homes in suburban areas have picked up the fastest in the first quarter this year.
Flash estimates from the Urban Redevelopment Authority (URA) showed that price increases in suburban homes beat the overall private property price index, which rose 2.1 per cent to 198.8 points in the quarter.
Analysts said that suburban condominiums may continue to see price increases of around 2 per cent in the coming quarters.
Buying a suburban private home might still be more expensive.
Analysts said the demand in that region is much more resilient than they have anticipated, leading to strong price growth.
Property prices in the suburban areas were up by 3.1 per cent in the first quarter, compared to the 2.1 per cent rise in the fourth quarter of last year.
This is followed by prices in the city fringe areas which grew 2.2 per cent.
And in comparison, the prime city areas only edged up 0.9 per cent.
Colin Tan, head of research and consultancy at Chesterton Suntec International, said: “The fact that the suburban market probably is the most affordable for the moment, also for the fact that I think it represents that people still have this upgrading dream, there is still a lot of demand. And possibly one effect is we have also seen apartments going progressively smaller and that could in a sense raise prices on a per square foot basis. ”
Analysts said the launch of fewer high-end projects in the prime areas for the quarter also contributed to its weaker price increase.
They also said that the suburban region might be more of a developers’ market.
They explained that looking at the NUS Singapore Residential Price Index (SRPI), which tracks the resale market, private homes prices for the non-central region dipped by 1.5 per cent in February on-month, after a 2.8 per cent appreciation in January.
While it is still early stages, analysts said that this suggest the growth in the suburban or non-central region is likely being propped up by high launch prices set by developers.
Looking ahead, they add that new cooling measures are unlikely as the government is taking a wait-and-see approach for now.
Donald Han, vice chairman of Cushman & Wakefield, said: “In the last three months of the first quarter, we saw a lot of big events that affect the Singapore market and the global market as well, with the uncertainty that is happening in Japan and in the Middle East.
“The true effect on the property market will probably be felt only in the second quarter…so I think the government will not be too hasty in wanting to introduce any more measures.”
Overall, observers said the slower price growth shows that previous cooling measures have kept a lid on rising home prices in the private sector.
And having moderated for six straight quarters, analysts believe that home prices here are in for a soft landing.
URA also said that there was a total supply of 65,699 uncompleted units from private housing projects in the pipeline.
Of these, 33,000 units were still unsold.
This supply also does not take into account new sites that were recently sold or will be made available for development through the Government Land Sales programme.
Source : Channel NewsAsia – 1 Apr 2011