Private home market has peaked: Analysts

URA residential priceindex up 0.2% in Q4; pace of increase the weakest since Q3 2009

The rise in private home prices in Singapore slowed to a crawl in the fourth quarter last year, with property analysts saying the data showed that the market had peaked as they forecast prices to fall 5 to 10 per cent this year.

While the Urban Redevelopment Authority’s (URA) said yesterday its private residential property price index hit a new record high of 206.2 in the fourth quarter, the rise was a mere 0.2 per cent from the previous three months, compared with the third quarter’s 1.3 per cent rise. The pace of increase, marking the weakest showing since the third quarter of 2009, was the same as the URA’s preliminary estimates released on Jan 3.

For last year as a whole, prices of private homes rose 5.9 per cent, significantly lower than the 17.6 per cent increase in 2010, according to the URA.

Mr Eugene Lim, key executive officer at property consultancy ERA Realty Network, said the slowdown of the price rise cannot be solely attributed to the additional buyers’ stamp duties (ABSD) of between 3 and 10 per cent, as these were only introduced from Dec 8.

“Unfavourable global market conditions have started to affect market sentiment in the last quarter of 2011,” he said.

He added: “The slowdown in price increase could also indicate high liquidity and cheap housing loans have become less effective in driving market demand as property price increases have outpaced wage increments.”

ERA is of the view that private home prices had peaked in 4Q 2011, saying that the ample supply of uncompleted properties in the pipeline, including an estimated 2,900 executive condominiums that can be yielded from the first half 2012 Government Land Sales programme, as well as global economic uncertainties would likely cause the market to ease in the coming months.

At the end of the fourth quarter, there was a total supply of 77,089 uncompleted private residential units from projects in the pipeline, the highest ever recorded. Of these, 39,184 units remained unsold, the URA said.

Property consultancy PropNex said that market cooling measures imposed last year – including the ABSD, the lower loan-to-value ratio cap of 60 per cent to individuals with one or more housing loans, the extended minimum holding period for sellers’ stamp duty (SSD) to four years, and SSD as high as 16 per cent – had encouraged more home buyers to adopt a mid-to-long-term view for their property purchase.

For this year, PropNex chief executive Mohamed Ismail is forecasting an overall 5 to 8 per cent decline in prices for private homes in the core central region. Mass market condominiums in the outside central region should see a 3 to 5 per cent dip, as new developments in this area are launched at prices that are sensitive to the cooler market sentiment, he said. For the overall private home market, Mr Ismail expects a 5 per cent dip this year.

Mr Lee Sze Teck, senior manager of Research and Consultancy at property consultancy DWG, said the market could ease around 10 per cent this year, noting that prices “are showing signs of peaking in 4Q 2011, (with) the decreasing rate of appreciation evident across all property types and localities”.

Source : Today – 28 Jan 2012

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