Property market to grow riding on the back of healthy economic outlook

Property experts are bullish that the residential property market will continue to grow this year.

Riding on strong market sentiment and a healthy economic outlook, they say a broader base price growth is possible.

As a whole, home prices are expected to jump 12 percent this year, up from 10 percent in 2006.

High-end homes led the rise in prices last year but analysts say the increase in 2007 will be more broad-based.

While they are expecting the price increase to trickle down to the mass market, they say the hike will not be as great as at the luxury end.

Tay Huey Ying, Director Research and Consultancy, Colliers International, says: “The HDB upgraders are relatively price sensitive, plus the fact that there is still ample although shrinking unsold stock in the market. In fact, we’re looking at the mass market prices to continue to firm in 2007 with possibly price growth of up to 10 percent for those projects with strong locational advantage, for example next to the MRT.”

Developers were building up their land bank through en bloc collective sales of prime properties in 2006.

But for this year, analysts say high prices might divert their attention to other types of property.

“Sites for luxury developments will still continue to be very sought after, and we see prices for such sites to continue to soar. But because the prices are going to be so high we expect some attention to be diverted towards the second-tier sites, meaning those sites at the fringe of district 9 and 10, as well as those at or near the HarbourFront locations,” says Ms Tay.

Some analysts believe the high prices commanded by new launches last year may not be sustainable.

Colin Tan, Director Research and Consultancy, Chesterton International, says: “If you compare with home prices in London and New York, Singapore prices certainly look reasonable. But you have to ask yourself – if our prices are reasonable, then why is it that we don’t find that kind of buyers that you find in New York and London? Instead, we are having more of the traditional Asian buyers. That will tell you something.”

Looking ahead, experts say overall property prices could grow by an average of 3 percent quarterly, bringing total growth for the whole year to 12 percent.

Source: Channel NewsAsia, 04 January 2007 

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