Private home prices up marginally in Q3

Prices of private residential properties in Singapore rose 0.5 per cent to a new record high in the third quarter of 2012, according to flash estimates released by the Urban Redevelopment Authority.

This was the highest quarter-on-quarter rise this year, compared to the 0.1 per cent drop in the first quarter and the 0.4 per cent increase in the second quarter.

The increase in Q3 was led mainly by the mass market segment where prices rose 1 per cent, compared to the 0.5 per cent increase in the previous quarter.

Prices also rose at a faster pace for homes in the city fringe. They were up by 0.7 per cent in Q3, compared to the 0.4 per cent rise in Q2.

Meanwhile, prices of homes in the core central region moderated, recording an increase of 0.2 per cent in Q3, lower than the 0.6 per cent rise in the previous quarter.

Some analysts do not see record prices bringing about a new round of cooling measures.

Knight Frank’s research head, Png Poh Soon, said: “With the third round of QE (quantitative easing), of course there are fears that foreign funds will come in in a big way. But I think for the government to consider the next round of cooling measures, they need to continue to monitor other things other than prices, because we are also seeing a lot of uncertainties in the broader economic picture; things are slowing down in China and there is still an element of uncertainty in Europe.”

Some analysts expect more upside to private property prices in the coming quarters as a result of higher land bids tendered by the developers.

Alan Cheong, director for research & consultancy at Savills, said: “Ignoring the effects of location, for 1H2012, the average price for residential GLS (Government Land Sales) sites was S$523 psf ppr compared with S$457 psf ppr for 2H2011.

“For 3Q2012, the average was S$758 psf ppr due mainly to the predominance of RCR sites being awarded. Given that land costs make up the largest element in total development costs, come 2013 when these projects are launched, barring externalities, intervention and assuming developers pass on these costs to the market, the property price index may accelerate again.”

For Q4 this year, Mr Cheong expects prices to rise 1 per cent on-quarter.

ERA’s Eugene Lim concurred. “In Q4, we are expecting more launches, especially in the suburban areas. This is expected to push prices upwards, especially in the Outside Central Region. We can expect the Q4 price index to perhaps inch higher than the third-quarter rise of 0.5%; we probably can expect somewhere in the region of perhaps near to one per cent.”

Given that property prices have only increased by 0.9 per cent so far, market watchers say 2012 should also see the slowest increase in the last three years.

Prices surged 16 per cent in 2010 and 5.7 per cent in 2011.

“With increased supply anticipated, I expect prices to further moderate, resulting in an overall 1 per cent to 2 per cent growth in the private property price index for the entire 2012,” said Mohd Ismail, CEO of Propnex.

Chia Siew Chuin, director of Research & Advisory, Colliers International, said: “Buyer resistance to prices that are already at record levels is increasing, and the government is likely to implement more measures if the market shows any untoward reaction to QE3. These factors should maintain some degree of stability and sustainability in Singapore’s residential market over the next 12 months.”

The supply of new private homes is also expected to remain high in the next few years. Over 50,000 new homes are scheduled to be completed between 2013 and 2015.

Source : Channel NewsAsia – 1 Oct 2012

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