Home Prices Up, But May Cool

Source : Weekend TODAY, October 27, 2007

More homes being built to help meet demand, says URA























PRIVATE home prices rose islandwide in the three months ended Sept 30, but the Urban Redevelopment Authority (URA) said more supply is in the pipeline to meet demand.

“As at third quarter 2007, there were about 65,400 private residential units in the pipeline, comprising the supply from projects that are already under construction and those that have been granted planning approval but are not under construction yet,” the URA said.

The number marks a 16.4-percent increase over the potential supply of about 56,200 units in the second quarter.

According to the latest data, housing properties were up an average 8.3 per cent over the quarter, slightly faster than the Government’s estimated 8-per-cent rise forecast made in Oct 1. Versus end-2006, prices averaged 22.9 per cent higher.

“While there weren’t many new launches in the market in ... September and August, the results show that developers have held their prices well,” said Mr Donald Han, managing director of property consultancy Cushman and Wakefield. Those two months were clouded by sub-prime worries and the Hungry Ghost month, a traditional lull period. But prices picked up in the last two weeks of the third quarter, said Mr Han.

The upswing in prices was led by gains in the prime central area, said Mr Eugene Lim, assistant vice-president at real estate agency ERA. Property prices in the prime locations increased 8.3 per cent, faster than 7.9 per cent in the second quarter. Outside the central area, prices were up 7.9 per cent.

UBS real estate analyst Regina Lim attributed the demand to foreigners, who accounted for about 50 per cent of sales in prime areas. “We expect foreign buying to continue to support prices in the prime and midrange segments,” said Ms Lim.

However, others detected demand strengthening in the mid- and lower-end of the market. “The prime areas were where the developers were most confident, but the gains were supported by the mass segment market this time round, and to a certain extent, the mid-end market,” said Mr Han.

URA data showed that other property segments, commercial and industrial, also drew robust interest.

Housing Development Board (HDB) data, also released yesterday, painted a similar picture for the resale and rental markets. The HDB Resale Price Index rose 6.6 per cent in the third quarter, and was up 11 per cent from the start of the year.

However, the number of resale transactions fell 11 per cent to 7,722 from 8,708 in the previous quarter, but Mr Mohammed Ismail, chief executive of real estate agency Propnex said it may be “too early” to conclude that consumers are price sensitive.

“(The) HDB market will be a star performer in the next six months,” said Mr Han. “We’re seeing a full upturn on all sectors of the market and HDB has just joined this bandwagon after being in the doldrums in the last two, three years.’