The government’s anti-speculative measures for the property market appear to have worked.
Private home prices grew at a slower pace of 5.1 percent in the first quarter, according to estimates from the Urban Redevelopment Authority (URA).
At this rate, analysts expect prices to return to the 2008 peak levels before the end of this year.
Home prices are rising again with strong take up for new launches like The Vision, The Altez and Cube 8.
The better economic outlook and low interest rates have also helped.
But the increase has moderated to 5.1 per cent in Q1, down from 7.4 per cent the previous quarter.
Analysts said prices may eventually rise six per cent after accounting for deals done in late March.
Overall, they said the cooling measures introduced last September and in February have gained traction.
Desmond Sim, associate director, Research & Consultancy, Jones Lang LaSalle, said: “The core central region has the highest rate of decline, a 2.8 per cent drop. So traditionally the core central region is for speculators. It is a sign that short term speculation has been curbed by these measures.”
Across all segments, prices grew at a slower pace in Q1.
Private homes in the city cost 4.5 per cent more while those in the city fringe went up by 7.2 per cent.
Meanwhile, mass market home prices, which have already hit their peak, grew 3.9 per cent in the first quarter.
Market watchers expect home prices to increase by between 15 and 20 per cent for the whole of 2010 and this growth will be led by the mid-tier and high-end segments.
Experts said higher land prices seen in recent tenders will continue to support price growth.
Tay Huey Ying, director, Research & Advisory, Colliers International, said: “If these predictions were to come true then prices would have surpassed the 2008 peak by up to 14 per cent and that would be for the mass market projects.
“But across all levels it would have hit 2008 peak by around three per cent for high tier and nine per cent for the mid tier projects.”
Property analysts said home prices could breach the peaks set in 2008 and 1996 within the next three to six months.
Property consultancy firm Cushman & Wakefield said the URA price index is now about two per cent off the peak in Q1 of 2008 and four per cent shy of the record in 2Q 1996. And the market could breach these peaks within the next three to six months.
In all, real estate consultancy firm CB Richard Ellis said the residential price index has recovered by a total of 30.7 per cent since it bottomed out in the second quarter of 2009.
Source: Channel News Asia, 1 Apr 2010