Singapore property prices continue to firm despite cooling measures

Non-landed private home prices in Singapore galloped higher in January despite the government’s recent stringent measures to choke off property speculation.

Flash estimates compiled by the National University of Singapore Institute of Real Estate Studies show the overall Singapore Residential Price Index rising by 2.6 percent month-on-month.

This is more than double the one percent increase in the index recorded in December.

The central region sub-index jumped 2.7 percent to 165.3 points, a reversal from a 0.8 percent decline in December.

Meanwhile, the non-central sub-index rose 2.5 percent to 158.8 points, slightly higher than the 2.3 percent increase in December.

Analysts say low interest rates and strong economic growth are pushing home prices up.

While some analysts say it is too early for the numbers to reflect the full impact of the cooling measures, others say it is alarming that prices are still rising so quickly.

And they say that if transaction volumes and prices continue to rise, another round of cooling measures cannot be ruled out.

Colin Tan, Head – Research and Consultancy, Chesterton Suntec International, said: “For month-on-month, it’s 2.6 percent which translates to over 30 percent a year so it’s rather robust and is quite alarming.

There’s still a lot of demand. A lot of these buyers are actually looking to buy real property as a hedge against inflation.

That’s why over the past few days, we have also seen news articles of people moving into gold and other avenues as a hedge against inflation. So property is no exception.

If the price increase continues at this pace, certainly I think the authorities will have to look at it. They may try to postpone and see, give it more time.

But if nothing changes, yes, we can expect another set of cooling measures.”

Source : Channel NewsAsia – 28 Feb 2011

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