Rate of increase in S’pore housing prices slows down

The rate of increase in housing prices in Singapore slowed down in the second quarter of this year, according to property consultancy firm DTZ.

It said resistance to the high asking prices and the uncertainty in the stock market sidelined buying interest in the property market.

The only exception was in the mass market segment where prices of secondary condominiums and apartments went up further compared to the previous quarter.

Resale prices of leasehold homes in the suburban areas rose by 4 per cent quarter-on-quarter to S$648 per sq ft, compared to the 2.1 per cent increase in Q1 2010.

DTZ said the comparatively higher prices of new developments and aggressive bids for government land sales (GLS) sites in the suburban areas had a cumulative effect on raising the prices of homes in the secondary market.

Ms Chua Chor Hoon, Head of DTZ South-east Asia Research, noted that developers are likely to tone down their land bids in view of the unprecedented high number of suburban sites to be sold in the GLS in the second half. She said this will keep a check on prices of mass market homes going forward.

Within the prime districts of 9, 10 and 11, average resale prices of freehold non-landed homes rose 2.6 per cent quarter-on-quarter to a new high of S$1,493 per sq ft. This is 0.7 per cent higher than the previous record of S$1,483 per sq ft in the fourth quarter of 2007.

Meanwhile, prices of freehold non-landed resale homes outside the prime districts climbed by 2.9 per cent to reach its previous peak of S$747 per sq ft achieved in the fourth quarter of 2007.

Average prices for luxury non-landed homes rose 3.5 per cent on-quarter to reach S$2,588 per sq ft. However, they are still 7.6 per cent below the record level of S$2,800 per sq ft hit in Q4 2007.

Although sales activity has slowed down in May and June, DTZ’s executive director for residential, Margaret Thean, said: “The slower take-up rate for new developments is more sustainable. There is still buying interest and more new developments are being planned to be launched in the coming months.”

She added that if the developments were well-taken up, that would motivate more developers to launch other projects, thus stimulating buying interest.

With the total sales of new homes by developers between January to May 2010 already at 7,666 units, DTZ estimated that the total take-up for the whole year would fall between 13,000 and 15,000 units, based on the average monthly take-up of 900 new units in the last 5 years.

Source: Channel News Asia, 24 Jun 2010