Private residential prices rose by 3.8 percent during the fourth quarter of last year, which is up a touch higher than earlier estimates – taking the gains for all of 2006 to 10 percent – the highest annual growth in 8 years.
For the first time, the URA has broken down the data according to 3 new geographical regions, and the numbers show that it was the high-end market that led the increase with a 25.4 percent jump in prices.
That is way higher than the 3-4 percent seen for the mass market.
The URA has divided the private housing market into 3 newly drawn out regions.
They are the Core Central Region – which includes higher-priced projects in districts 9, 10,11, Downtown Core and Sentosa; the Rest of Central Region – mid-tier developments; and the Outside Central Region – or suburbs where most of the mass market properties are located.
A record number of 11,147 private housing units were launched last year, just 451 units shy of the peak in 1996.
Analysts say this reflects developers’ confidence in a strengthening economy.
“In the downtown core and the 9, 10 and 11, where there is a perception of a shortage of units, then of course demand and supply forces would probably set more benchmark prices. But for the suburban market it really comes down to affordability. You may set benchmark price, and you may achieve it for a while, but if there are no other buyers then you may have to lower your prices eventually,” said Colin Tan, Director Research and Consultancy, Chesterton International.
Analysts say the best advice they can give home-buyers now is for them not to panic and run out to buy the first property they see. Instead, they should think carefully because the fundamentals of a good property still remain.
Property experts believe overall home prices may increase between 5 and 8 percent, while the luxury segment might grow by up to 15 percent this year.
Demand for new private home is also estimated to exceed 10,000 units.
Source: Channel NewsAsia, 26 January 2007