Private property prices up 5.2%

2nd-quarter spike sends property price index to record-high of 184.1 pts

SINGAPORE - The crowds at showflats have dwindled in recent weeks but private home prices continued their unabated rise in the second quarter, sending the residential property price index to a record high of 184.1 points.

Estimates released by the Urban Redevelopment Authority (URA) show that private property prices shot up by 5.2 per cent, compared to a 5.6-per-cent increase in the previous quarter and beating analysts' forecast of a 3 per cent increase.

The increase also pushed the residential property price index to an all-time high, surpassing the market peak of 181.4 points in the second quarter of 1996.

Still, analysts say it is too early to call for additional cooling measures.

Colliers International director of research and advisory Tay Huey Ying said that further cooling measures by the Government are unlikely as May sales dropped to 1,078 units from 2,208 in April - a sign that the earlier measures have taken effect.

Echoing a similar view was Credo Real Estate executive director of residential services, Mr Liang Thow Ming. who noted that "a lot of good measures have been put in to make sure that speculation has been weeded out of the market".

He added: "Compared to 1996, I think we are a little bit above - especially in mass market - in terms of prices. However, in terms of income, I think we are also well above the 1996 level. So in that sense where affordability is concerned, it's still pretty well-maintained. So, I don't think there is a bubble over here."

Meanwhile, private homes in the city and prime districts or Core Central Region cost 5.1 per cent more while those in the city fringe or rest of the central region saw price increases of 4.5 per cent.

The index that measures private home prices in the outside central region also hit more than 170 points and surpassed its 150 point peak in the first quarter of 2008.

At the same time, private home prices in the suburbs or outside central region rose 5.7 per cent.

Looking ahead, home prices are expected to soften as the Government rolls out more state land for tender in the second half.

"The mass market has already gone beyond the last peak, so we don't expect it to increase by that much of a percentage but we still expect some growth in that area as well," said Credo's Mr Liang.

Analysts expect prices to grow by up to 3 per cent for the next two quarters, bringing the full year price increase to about 20 per cent.

"Should the buying fever returns and put pressure for private home prices to escalate beyond 5 per cent per quarter for the mass-market segment, more cooling measures can then be expected," said Ms Tay.

Source: Today, 2 Jul 2010