Private home market ‘stabilising’ despite rise

Prices reach new high but market watchers believe Govt curbs will have impact

Private home prices rose at a faster pace than initially estimated to hit a new all-time high in the third quarter, boosted by the strong response to new launches last month, but analysts say the market has stabilised amid expectations the Government will impose more curbs if these are necessary to forestall the impact of hot money inflows.

Ms Chia Siew Chuin, Director of Research & Advisory at property consultancy Colliers International, said: “In the last three months of the year, while demand for new private homes is likely to remain healthy barring any major economic crisis, the positive effects of longstanding demand drivers – such as low interest rates, high liquidity and the allure of property as an investment tool – are expected to be limited by mounting downside risks.”

She warned that policy risks would potentially constitute the most significant impact, saying: “Should home price increases show no sign of abating, following the mortgage curbs on residential property introduced on Oct 5, the Government may introduce another round of cooling measures sooner rather than later.”

Mr Mohd Ismail, CEO of PropNex Realty, held the same view, saying: “Given the Government’s intention of keeping property prices stable and affordable, we believe further upside in private residential prices will be limited. The presence of price resistance should help to moderate any price increases for the next quarter.”

“We expect residential property prices in Singapore to remain largely flat with marginal and gradual growth of 1 to 2 per cent for the entire 2012,” he added.

The Monetary Authority of Singapore this month set a maximum tenure of 35 years for all new home loans, and those with tenures exceeding 30 years face tighter loan-to-value limits, in a bid to home prices in check amid low interest rates and a surge in liquidity due to quantitative easing measures by major central banks worldwide.

The curbs on mortgage tenures were the sixth set of market-cooling measures since Sept 2009.

Final data released yesterday by the Urban Redevelopment Authority (URA) showed private residential prices rose 0.6 per cent in the July-September quarter from the previous quarter, a tick higher than the 0.5 per cent it estimated earlier this month and following from the 0.4 per cent rise in the second quarter.

The rise lifted the URA’s private property price index to a new record of 208.2 points, up about 56 per cent compared to 133.3 points in the second quarter of 2009, the market’s most recent cyclical trough.

Citing the URA data, Mr Joseph Tan, Executive Director for Residential at property consultancy CBRE, said: “Demand for new homes in Q3 2012 numbered 5,916 units, 9.5 per cent higher than the 5,402 units sold in Q2 2012. At the three-quarter mark of 2012, the total volume of new homes sold numbered 17,844 units, and is the highest number of new homes ever sold.”

The previous record for new home sales was 16,292 units sold in the whole of 2010.

The lion’s share of 4,367 units, or 73.8 per cent, was sold in mass market projects located in the Outside Central Region (OCR), he said, adding that the top-selling mass-market projects in the quarter were eCO in Bedok South, Parc Centros in Punggol, Parc Olympia in Changi, Kovan Regency and Riversails in Upper Serangoon.

In the public housing sector, the Housing and Development Board said in its final reading yesterday that resale prices rose 2 per cent in the third quarter to 197.9, in line with its flash estimate released earlier this month.

The number of resale transactions fell 6.4 per cent to 6,560 in the third quarter. The highest median resale prices for three-, four- and five-room HDB flats were S$442,500 in the Central region, S$690,000 in Queenstown and S$754,000 in Bukit Merah, respectively, the HDB said.

The highest median cash-over-valuation premiums for three-, four- and five-room flats were S$41,000 for Central, S$55,000 in Queenstown, and S$66,500 in Bishan, respectively, it added.

Source : Today – 30 Oct 2012

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