Prices of completed, non-landed private homes up 0.1% in January

Prices of completed non-landed private homes inched up 0.1 per cent in January compared to the month before, led by small units and units in the non-central region.

This is based on flash estimates from the National University of Singapore (NUS) for the Singapore Residential Price Index (SRPI), after a revised 0.6 per cent price fall for completed private homes in December.

January 2016 estimates are based on a revised basket – expanding to 574 private residential projects across 26 postal districts that were completed between October 2003 and September 2015. This was up from 429 projects in the previous basket, with central region homes making up 37 per cent and non-central homes accounting for the rest.

The Central Region is defined as Districts 1 to 4 (including the financial district and Sentosa Cove) and the traditional prime residential districts of 9, 10 and 11 by the NUS’ Institute of Real Estate Studies, which minted the SRPI series.

As a transactions-based index, the NUS SRPI tracks month-on-month price movements of private non-landed homes in a pre-determined basket and uses hedonic regression to estimate prices. The composition of the basket is adjusted every two years to reflect the changes in the completed private housing stock in Singapore.

NUS said the revised basket differs from the previous basket in three main areas: Firstly, Basket 8 comprises newer projects and “is better marked-to-market in terms of the residential amenity levels expected of non-landed market today”.

Secondly, Basket 8 does not remove the earlier projects that were completed between October 2003 and September 2005, hence increasing both the number of price signals for computing the NUS SRPI suite and the coverage of non-landed private residential market.

And thirdly, small units are also more prevalent in Basket 8, where both the number and proportion of such units rose markedly in both the central and non-central regions, NUS said. Small units represent about 31 per cent of projects or about twice the number in the previous basket.

For the new basket with December 2015 as the base year, small units of 47 sq m (506 square feet) or less rose 0.6 per cent month on month; units in the non-central region (excluding small units) rose 0.5 per cent. These were a recovery from their respective December declines of 0.3 and 0.6 per cent.

But units in the central region (excluding small units) slipped a further 0.5 per cent in January, after a revised 0.8 per cent fall in December. NUS SRPI December revised figures were based on Basket 7, that had December 2013 as the base period.

Amid heightened stock market volatility and economic headwinds, residential purchases in the central region will be hit harder than non-central apartments below S$1.5 million (US$1.1 million), said ERA Realty key executive officer Eugene Lim.

Since buyers of completed homes tend to be owner-occupiers with specific needs for unit size and location, the non-central region typically draws more owner-occupiers than investors.

Mr Lim added that the investors group is not so active now, given the weak rental market. Savills Singapore research head Alan Cheong said however that he was expecting an uptick in price in January for central-region homes as agents were reporting a strong January performance.

But on the whole, property consultants find it difficult to draw any conclusion from month-on-month fluctuations and would rather wait for the quarterly statistics before concluding whether the overall price uptick for completed private homes in January holds any significance.

The low volume of transactions in January, just before the festive Lunar New Year, had further compounded the wobbliness in price signals, they said.

BT – 1 Mar 206

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