ST : Prices rising faster than for condos

Oct 23, 2010
LANDED HOMES

Prices rising faster than for condos

By Esther Teo



Landed home prices surged 7.7 per cent in the third quarter, compared to prices of non-landed homes, which inched up only 1.6 per cent as the market slowed after the cooling measures on Aug 30. Limited supply and robust economic growth have helped fuel sales. -- ST PHOTO: SAMUEL HE

RECENT price gains of relatively scarce landed homes have far outstripped rises for non-landed homes such as condominiums, leading to talk of an increasingly segmented market.

Overall, private home prices rose 2.9 per cent in the three months to Sept 30 - below the preliminary estimate of 3.1 per cent, according to the Urban Redevelopment Authority's third quarter price index released yesterday.

But the market was buoyed by landed home prices, which surged 7.7 per cent in the third quarter - up from 6.2 per cent in the previous quarter.

Prices of non-landed homes, in contrast, inched up only 1.6 per cent as the market slowed, owing to the impact of the Government's property cooling measures introduced on Aug 30.

Detached homes, in particular, have led the pack with a strong 8.4 per cent price jump. They are now up 27 per cent in the first nine months of the year.

Prices of terrace and semi-detached homes also rose 7.2 per cent and 7.5 per cent respectively from the previous quarter, surging 22 per cent and 23 per cent since the start of the year. This compares with a 12 per cent price gain in the same period for non-landed homes.

Experts say that landed homes have performed strongly owing to their limited supply and the robust economic growth that has led to rising income levels.

The segment is also relatively insulated from the new property rules which target speculators. Landed homes tend to attract less speculation given the higher prices of such homes, analysts say.

Mr Colin Tan, head of research and consultancy at property firm Chesterton Suntec International, said that home buyers are now looking towards landed property as they are less risky and are more likely to rise in value.

'The market is so much smaller for landed homes, unlike for condos where there is a lot of supply,' he added.

Mr Steven Tan, executive director of residential at the OrangeTee agency, said that unlike condos, where the Government can release more land to cater to growing demand, the supply of landed homes is relatively limited.

'The new rules might affect buying sentiment but if the economy grows, more businesses make profits and incomes will rise, resulting in an increasing demand for such homes.'

However, he expects a slight moderation in landed home price rises to about 2 per cent in the fourth quarter.

Cushman & Wakefield's senior manager of Asia-Pacific research Ong Kah Seng predicts an average 3 per cent gain till the second quarter of next year.

Mr Ong said: 'In addition to locals, foreigners - mainly PRs who are granted permission to buy landed homes - are also looking at landed homes where possible.'

DBS economist Irvin Seah said that the landed homes segment was more stable as it is usually made up of wealthier buyers who are less affected by the new rules such as tighter financing measures.

Fewer private homes were sold in the third quarter - 8,513 units, from 9,873 the quarter before - a 14 per cent slide.

Propnex chief executive Mohamed Ismail said: 'The reason is that buyers of private properties are now being more price-conscious across all markets.'

He added that private property sales last month saw only 39 transactions above the $2,000 per sq ft median price mark, the lowest for the year so far.