ST : Private home prices continue upward climb

Apr 24, 2010

Private home prices continue upward climb

Values shoot up 5.6% for Q1 but there are signs of moderation

By Joyce Teo

PRICES of private homes are still heading north with values shooting up 5.6 per cent for the first quarter.

Strong demand from buyers last month helped to push prices beyond the flash estimate of 5.1 per cent but there are signs of some moderation amid the market heat.

The rise for the three months to March 31 was below the 7.4 per cent increase in the fourth quarter of last year, according to the Urban Redevelopment Authority (URA) yesterday, but prices are now just 1.4 per cent below the 2008 peak.

They are also 3.5 per cent below the heights hit in 1996 but will likely breach these levels by the second quarter, said Colliers International research and advisory director Tay Huey Ying.

Despite the robust numbers, experts said cooling measures imposed last September and in February appeared to have helped rein in runaway price rises and put a brake on speculation.

Ms Tay also believes the continued rise in prices has deterred some buyers and so helped moderate values.

Detached homes were the star performer in the first quarter, rising 9.6 per cent, up from the 7.9 per cent climb in the previous quarter.

Overall, the landed homes segment rose 8.3 per cent, after a similar rise in the fourth quarter last year. Non-landed home prices rose by 4.9 per cent.

Since the second quarter last year, landed home prices have risen 35 per cent, noted DTZ's head of South-east Asia research, Ms Chua Chor Hoon.

City centre non-landed homes - the only sector where prices have yet to cross the 2008 peak - rose by 3.3 per cent in the first quarter.

Prices in the city fringes and suburban areas increased by 7.9 per cent and 4.3 per cent respectively.

In suburban areas, prices of uncompleted homes rose more than prices of resale homes as some developers have set benchmarks for new launches. Apartments at The Vision in the West Coast area, for instance, sold for more than $1,000 per sq ft (psf) in March.

Yet while prices are still rising, they are now supported by rising rents. First quarter rents jumped by 4.7 per cent compared to a 0.6 per cent climb in the previous quarter, which followed five quarters of decline.

The rise indicates that residential rents could have bottomed out and are on the road to recovery, said CBRE Research executive director Li Hiaw Ho.

'Anecdotal evidence suggests an increase in the hiring of expatriate staff in the financial services and biomedical sectors as economic fundamentals improve, which, in turn, have translated to the increase in rents,' he said.

Ms Tay believes rents can strengthen by 10 per cent to 15 per cent this year as more expatriates arrive.

The resale market was also active, with 4,261 units transacted, up 6.5 per cent from the previous quarter.

In the first quarter, the 806 sub-sales accounted for 8.5 per cent of total sales. CBRE pointed out that the proportion of sub-sales fell below 10 per cent for the first time since the first quarter of 2007. Sub-sales are seen as a proxy for speculation.

This has helped take some pressure off prices, said Ms Tay.

While high-end and mid-tier home prices are forecast to rise 15 per cent to 20 per cent this year, mass market homes are expected to see a smaller gain of around 10 per cent, said Ms Tay.

In the new launch market, buying remains keen for selected projects.

A tie-up between Hong Realty and City Developments sold about 300 units of the 429-unit Tree House in Chestnut Avenue on Thursday, priced at about $800 psf.

joyceteo@sph.com.sg