Hot housing market raises more policy risks: Colliers

Rising private home prices may spell further policy risks amid the hot property sector, noted Colliers International.

Flash estimates by the Urban Redevelopment Authority (URA) show that private home prices increased 1.8 percent quarter-on-quarter in Q4 2012, capping the year which saw an overall 2.8 percent rise. This brings prices to an all-time high since the 2009 fiscal crisis.

This is still slower than the yearly growth of 5.9 percent recorded in 2011.

Chia Siew Chuin, Director of Research & Advisory at Colliers, highlighted that the government’s property curbs, including the additional buyer’s stamp duty (ABSD) and latest mortgage tenure caps, have effectively eased price growth.

“Notwithstanding, low interest rates and high liquidity continued to persist and drive demand for homes. The pace of price growth in Q4 2012 on a quarter-on-quarter basis had increased to 1.8 percent, from 0.6 percent in Q3 2012 and 0.4 percent in 2Q 2012.”

The three market regions also recorded higher growth rates, although at varied levels.

“The increased momentum in the quarter-on-quarter price up-trend – particularly in the mass-market housing segment, as well as the return of buying interest in the high-tier segments – are likely to keep the authorities high on guard again and have further heightened policy risks in the residential sector.”

Moving forward, the consultancy expects low interest rates to support demand in 2013. However, the private residential market may start the year “on a more tentative note, amid a more challenging economic environment and cautious employment prospects”.

Amid more activity, some buyers are becoming hesitant as prices reach record highs. But prices will be in check given the large housing supply in the next few years.

“The risk of further cooling measures from the government should also put developers and the majority of home buyers on a cautiously-optimistic stand and contain their risk appetite; thus, limiting their propensity to commit to prices that are extensively higher than the last done.”

Unforeseen circumstances aside, private home prices will continue flat lining and overall price growth for 2013 could range from two to three percent.

Source : PropertyGuru – 3 Jan 2013

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