Private residential property prices up 0.4%: URA flash estimate

Private residential property prices rose 0.4 per cent – that is according to the flash estimate of the price index for private residential property for the third quarter 2013 released by the Urban Redevelopment Authority (URA).

The private residential property index rose 0.8 points from 215.4 points in Q2 2013 to 216.2 points in Q3 2013.

URA said this is a moderate increase compared to the 1.0 per cent increase in the previous quarter.

URA said prices of non-landed private residential properties in both core central region and the rest of central region declined in the third quarter.

In the core central region, prices fell 0.5 per cent, more than the 0.2 per cent decline in the previous quarter.

Prices in the rest of central region decreased for the first time since the first quarter of 2012 by 1.1 per cent. In the previous quarter, prices increased by 0.2 per cent.

Analysts attribute the dip in prices of homes in these segments to lower demand as recent property loan curbs affected potential buyers’ ability to afford these higher-priced units.

In the outside central region, prices increased by 2.1 per cent in the third quarter.

Looking ahead, experts see the market stabilising in the next quarter.

Chua Yang Liang, research head of SEA and Singapore at Jones Lang LaSalle, said: “Typically, you see that initial contraction. If anything, the market would have stabilised by the next quarter or so.

“Right now, we are at 0.4 per cent. Going by the last few quarters, I think it is going to average about 0.5 per cent to 0.6 per cent for the next quarter. Going forward in the next few months, we are probably going to see a more stable market.”

Analysts also note the latest launches like Sky Vue and Thomson Three located in the rest of central region or city fringes have been competitively priced to lure home buyers, whose purchasing power have been curbed after the Total Debt Servicing Ratio (TDSR) was introduced in June.

Loan curbs under the TDSR framework require banks to check a borrower’s total repayments of student, car or mortgage loans do not exceed 60 per cent of the person’s gross income.

Low mortgage rates and a cash-rich market had pushed up Singapore property prices in recent years. But experts said these factors brought about by the US Federal Reserve’s quantitative easing measures have now been nullified by the latest loan curbs.

Experts said affordability is a key issue in the current property market.

And with units in premium locations like the core central region and rest of central region being priced higher, buyers are eyeing properties in the suburbs (outside central region).

Chia Siew Chuin, director of research and advisory at Colliers International, said: “You would see this trend of prices in the CCR (core central region) and RCR (rest of central region) trending downwards. Whereas the support in the mass market segment – we would see that supporting prices.”

Source : Channel NewsAsia – 1 Oct 2013

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