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03-04-2012, 07:46 AM
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
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
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