ST : Private home prices rise at slower rate

Oct 2, 2010

Private home prices rise at slower rate

High asking prices put off buyers even before govt measures kicked in

By Joyce Teo

THE heat started coming out of the private homes market even before the Government imposed cooling measures on Aug 30.

Some buyers have been holding fire for a couple of months at least, deterred by sky-high asking prices, especially in the mass market.

Private home prices rose 3.1 per cent in the three months to Sept 30, according to flash estimates from the Urban Redevelopment Authority (URA) yesterday, down on the 5.3 per cent increase in the previous quarter.

The estimates capture mainly transactions in July and August before the measures took effect. The data will be updated four weeks later.

Price rises have moderated over the past four quarters, but private home prices are still up 14.7 per cent in the first nine months of the year.

This puts the URA residential price index at 4.7 per cent above its all-time peak in the second quarter of 1996.

CBRE Research said the continuing upward trend in prices was 'probably due to the strong sales momentum in July and August, as the market slowed down from September after the government introduced the property measures'.

Yesterday's flash estimates showed that prices of non-landed private homes rose by 1.6 per cent in the city centre and 2.4 per cent in the city fringes and suburban areas.

City fringe prices have shot up 15.6 per cent this year while they are up 12.9 per cent in suburban spots and 11.7 per cent in the city centre.

CBRE Research said the stronger price growth in the city fringes and suburban areas could be due to the higher price benchmarks set by successful new launches such as The Scala, The Greenwich, Viva Vista and NV Residences.

But overall, buyers have become more price-resistant in the mass market segment, say experts.

Colliers International's director for research and advisory, Ms Tay Huey Ying, said the Aug 30 measures were more pre-emptive in nature and would hit sales numbers first.

Indeed, Jones Lang LaSalle (JLL) said that sales volume seems to be consolidating, with private home transactions in the third quarter possibly dropping by about 30 per cent from the second quarter.

The latest cooling measures will be more effective in shrinking demand and so are expected to curb overall price growth, said JLL's head of research for South-east Asia, Dr Chua Yang Liang.

The number of home sales in the fourth quarter will be far lower than in the first three quarters of the year, said CBRE Research.

But new projects near MRT stations are still expected to do well and prices overall will still be up about 15 per cent for the year, it added.

Ms Tay reckons that prices may stay flat or rise by just 2 per cent in the fourth quarter and be stable in the first quarter of next year.

'Price resistance is still there and there's the traditional slowdown during the year-end period, compounded by the cooling measures,' she said.

joyceteo@sph.com.sg


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Prices may stay flat or rise by just 2 per cent in the fourth quarter and be stable in the first quarter of next year, said Colliers International's director for research and advisory, Ms Tay Huey Ying.