Private home prices dip after nearly 3 years

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#1
The Straits Times
Apr 3, 2012
Private home prices dip after nearly 3 years

Resale transactions down by half, but suburban prices rise

By Esther Teo

PRIVATE home prices have fallen for the first time in almost three years, according to estimates out yesterday.

Overall prices fell 0.1 per cent in the three months to March 31 - the first decline since the global financial crisis in the second quarter of 2009 and a reversal from the 0.2 per cent rise in the fourth quarter last year.

The decline had been tipped for a while, given the slowing pace of price increases over the past two years as the Government introduced five rounds of cooling measures. Prices have risen about 55per cent from the middle of 2009 to now.

Experts say weaker economic conditions and cooling measures have subdued demand, hitting sales activity and resale prices.

One clear sign of the slowing market is that resale transactions were down by half across all segments in the first quarter over the previous three months.

The numbers from the Urban Redevelopment Authority (URA) also point to a tale of two diverging sectors, with the higher-end city centre and fringe homes slumping, while mass-market homes powered ahead.

City centre home prices dipped 0.9 per cent, and prices fell 0.7 per cent in city fringe areas. Foreign demand has been fizzling out since a 10 per cent additional buyer's stamp duty was introduced in December.

But suburban prices rose 1.2 per cent - double the 0.6 per cent gain in the previous quarter - thanks largely to a string of popular mixed-development suburban projects and small apartments launched in the period.

While acknowledging the strains on the sector, experts noted the strength of the mass-market homes segment, which has accounted for more than 80 per cent of new home sales so far this year.

ERA Realty key executive officer Eugene Lim said the 50 per cent decrease in resale transaction volumes had taken its toll on private residential prices.

Ms Chia Siew Chuin, Colliers International's director of research and advisory, noted: 'The sustained price increase (for suburban homes) is underpinned by robust demand for new mass-market projects that is fuelled by low interest rates and the continued availability of project launches.

'Creative promotions and sweeteners dangled by developers to cushion the impact of the additional buyer's stamp duty have also enticed home buyers to commit.'

For instance, suburban mixed-use projects such as The Hillier and Watertown, priced at between $1,200 and $1,300 per sq ft, helped drive up values in the first quarter.

Experts are divided on the likelihood of further cooling measures in the light of yesterday's figures.

Jones Lang LaSalle head of research for South-east Asia Chua Yang Liang noted that it is 'challenging' for the Government to deal with a market moving in two different directions.

The chance of more measures is higher, given stronger-than-expected growth in suburban home prices, together with record new home sales of more than 3,100 units in February.

'This divergent market is likely to continue into the second quarter of this year, unless there are further government interventions,' Dr Chua said.

'In my opinion, the state could discourage excessive purchases by raising eventual holding costs, such as a temporary increase in residential property tax rate for investment purposes.'

Credo Real Estate executive director Ong Teck Hui added: 'Had the indices for the city centre, city fringe and suburban segments all declined, the risk of intervention might have been less.

'But now we have a situation where the suburban segment is bucking the trend, leaving the market with the lingering uncertainty of further cooling measures.'

Colliers' Ms Chia thinks further cooling measures are unlikely in the short term. A host of factors working to take the heat off record-high home prices, such as the slow resale market, the languishing high-end sector, the bumper supply of state land released, and home buyers' resistance towards ever-increasing prices are already in play this year, she said.

She expects overall prices to fall 5per cent this year, while PropNex chief executive Mohamed Ismail expects city centre and city fringe home prices to fall 5 per cent but suburban prices to rise 3 to 5 per cent.

URA's flash estimates are based on transactions in the first 10 weeks of the quarter. They will be updated in four weeks.

esthert@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
next, interest rates rise? Big Grin
1) Try NOT to LOSE money!
2) Do NOT SELL in BEAR, BUY-BUY-BUY! invest in managements/companies that does the same!
3) CASH in hand is KING in BEAR! 
4) In BULL, SELL-SELL-SELL! 
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#3
My understanding is that interest rate is not a policy tool of MAS. It is set by ABS.
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#4
I always wonder how does MAS control domestic money flow? If interest rate continues to be low, why would people not invest into properties?

MAS is not helping MND to control property price.
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#5
(03-04-2012, 09:30 AM)freedom Wrote: I always wonder how does MAS control domestic money flow? If interest rate continues to be low, why would people not invest into properties?

MAS is not helping MND to control property price.

do you have a mandate that you must invest into property ?
I thought investors are free to invest in anything which gives the best return.

even the best among the worst, does not mean it is anywhere near a good investment.

lol.
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#6
(03-04-2012, 10:20 AM)cfa Wrote:
(03-04-2012, 09:30 AM)freedom Wrote: I always wonder how does MAS control domestic money flow? If interest rate continues to be low, why would people not invest into properties?

MAS is not helping MND to control property price.

do you have a mandate that you must invest into property ?
I thought investors are free to invest in anything which gives the best return.

even the best among the worst, does not mean it is anywhere near a good investment.

lol.

please, be a grownup.
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#7
(03-04-2012, 10:30 AM)freedom Wrote:
(03-04-2012, 10:20 AM)cfa Wrote:
(03-04-2012, 09:30 AM)freedom Wrote: I always wonder how does MAS control domestic money flow? If interest rate continues to be low, why would people not invest into properties?

MAS is not helping MND to control property price.

do you have a mandate that you must invest into property ?
I thought investors are free to invest in anything which gives the best return.

even the best among the worst, does not mean it is anywhere near a good investment.

lol.

please, be a grownup.

This was what you said and who is not growing up. Must I ask you to grow up ? lol.
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#8
(03-04-2012, 08:50 AM)brattzz Wrote: next, interest rates rise? Big Grin

I keep having this niggling SUSPICION that policy makers MAY have the vested interest not to have interest rate rise as it'll most likely have a more serious impact on our property market.

Perhaps Singapore should follow some other countries' level of transparencies where elected office bearers need to declare their assets and it's breakdown on a regular basis. Tongue

Very much like those in the audit line, they need to behave in a manner that clears any real or perceived doubts of their independence.
Luck & Fortune Favours those who are Prepared & Decisive when Opportunity Knocks
------------ 知己知彼 ,百战不殆 ;不知彼 ,不知己 ,每战必殆 ------------
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#9
(03-04-2012, 10:46 AM)cfa Wrote:
(03-04-2012, 10:30 AM)freedom Wrote:
(03-04-2012, 10:20 AM)cfa Wrote:
(03-04-2012, 09:30 AM)freedom Wrote: I always wonder how does MAS control domestic money flow? If interest rate continues to be low, why would people not invest into properties?

MAS is not helping MND to control property price.

do you have a mandate that you must invest into property ?
I thought investors are free to invest in anything which gives the best return.

even the best among the worst, does not mean it is anywhere near a good investment.

lol.

please, be a grownup.

This was what you said and who is not growing up. Must I ask you to grow up ? lol.

If you think my comment is wrong, could you please reply to that topic? Don't be so petty to come to other topics to start something inappropriate.
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#10
Just a reminder.

Please keep discussions civil. No personal attacks, sarcasm or insinuations, please.

Thank you.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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