Now For Others To Be Open

Finally, the general public will be able to form a more accurate view of how the private residential market is performing — or rather how the various segments of the market are doing.

For the first time, the Urban Redevelopment Authority has released the price movements for private residences in three geographical areas to show differences between the various segments.

We now know that general prices outside the “hot” areas for apartments and condominiums rose by only 3 to 4.2 per cent. This presents a more comforting picture for the potential buyer than an aggregated 11.1-per-cent rise. There is an improvement in prices, but the rise is gradual. So, for the genuine buyer, there should be no reason for panic buying.

However, remember that the economy is improving, so prices should move at the same rate as that of the economy, at the very least. The release of more information is somewhat overdue because as early as 2005, I faced the problem of explaining to clients why the values of their properties were still declining even as the general index showed consecutive price increases.

My explanations became less convincing each quarter as the problem grew worse — not helped by the many bullish comments in the market. The media also did not help by not clarifying that the index is just a general indicator.

In the absence of a helpful indicator, the public is at the mercy of the manipulative market player. The release of more data is a start to answering all these valid questions.

The data released on Friday also showed that prices for uncompleted non-landed properties in the central core rose by 25.4 per cent. This is consistent with the actual market experience. However, the rise of 9.9 per cent for completed units seems inflated, probably as it includes the impact of the many collective sales transacted in these areas in 2006. The actual rise is probably closer to the 3 to 4 per cent experienced outside the core areas.

Similarly, the general rental hike of 14.1 per cent for the whole of 2006 is not indicative. The actual rise is probably closer to 50 per cent for units in the central core (because we have seen rentals double upon renewal for some areas) and considerably less for units elsewhere.

Apart from the authorities, we could also do with more market transparency from the sellers. This is because more developments are incorporating wider bay windows, longer balconies and longer air-con ledges into their saleable floor areas. So, in effect, a 1,600-sq-ft unit advertised today is not quite the same as a 1,600-sq-ft unit sold 10 years ago. Potential buyers should do a proper like-for-like comparison.

And of course, we have also read recently of borrowers complaining that they are not fully aware of what a board lending rate actually means. The authorities have taken the lead, so to all the other market players: Can we have more transparency please?

The writer is director for research at Chesterton International.

Source: Weekend Today, 27 January 2007

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