As private residential property prices rose 17.6 per cent

SINGAPORE - Prices of private residential properties hit new highs in the fourth quarter of last year, capping a year of spectacular surge in private home prices.

According to flash estimates from the Urban Redevelopment Authority (URA) yesterday, the price index for private residential property jumped 17.6 per cent last year - a 10-fold spike in the rate of increase compared to the recession-hit 2009, when overall prices of private properties rose by 1.7 per cent.

The spot of good news for private home hunters is that the increase in prices appears to be moderating: Prices rose 2.7 per cent between October and December, compared to a 2.9 per cent increase in the third quarter.

With private home prices already surging past their 1996 peaks, property analysts believe there is little room for further increase; and as prices stabilise, they noted that the Government may not need to introduce new measures to curb overheating any time soon.

Cushman & Wakefield vice- chairman of property brokerage Donald Han said: "If you look into the price increases we saw both for HDB and private property, the price increases were in the comfortable range, between 2 per cent and 3 per cent quarterly ... Alarm bells will ring if you see a quarter-to-quarter increase of between 5 and 6 per cent, or even in excess of that."

For the whole of 2010, private home prices surged 14.3 per cent, 17.5 per cent and 14.5 per cent in the central, city-fringe and suburban regions, respectively.

Property analysts said increases of similar magnitude are unlikely to be seen this year as economic growth moderates.

Singapore's economy is expected to expand between 4 and 6 per cent this year, compared to an estimated 14.7 per cent growth last year.

Prices of non-landed residential properties in the core-central region increased 2.3 per cent in the fourth quarter, more than any other region. The city-fringe area recorded a 1.7-per-cent rise, while the suburban areas witnessed a price increase of 1.6 per cent in the same period.

Analysts expect private home prices to rise between 8 and 12 per cent this year, with high-end homes - which are yet to reach their 2008 peak - leading the price increases. They noted that foreigners will continue to favour mid-tier housing.

Said Ms Tay Huey Ying, director of research and consultancy at Colliers International: "In view of uncertainties still lurking in the larger global economies, by and large, foreign demand would continue to look to contain their risk exposure in the property sector by focusing their purchases in the more affordable range in the mass market and the mid-tier."

She added: "When these homes are eventually completed and there is a lack of rental demand, this may not bode well for the market."

Ms Tay said that developers may be keeping "aggressive pricing strategies at bay", following the Government's cooling measures in August and its ramping up of land supply.

But Mr Han, for one, was not ruling out further Government intervention should prices increase "beyond economic fundamentals". Mr Han added that should the Government be forced to act, it could tweak the loan-to-value ratio for homeowners' second and subsequent properties which stands at 70 per cent currently.

by Jo-Ann Huang Limin
05:55 AM Jan 04, 2011

Source: www.todayonline.com