The property market has gone on a bull run this year, and industry watchers believe prices will continue to climb in 2008, albeit at a slower pace.
Good demand sent property prices soaring this year. In the first nine months alone, prices rose by over 20 percent, double the increase for the entire 2006. Industry watchers said this level of optimism has not been seen since the late 1990s. "Residential sales this year have hit a record high. We haven't seen anything as high as this. The typical 10-year average is about 7,200-over private homes sold a year. This year, we are going to see more than double that figure," said Nicholas Mak, analyst at Knight Frank.
"This market sentiment has greatly helped the local buyers. Mainly, I must say it's fuelled by foreign investors, picking up many of the high-end condos. Likewise, we also witnessed a lot of foreign international funds, Middle Eastern funds, European funds and even some local investors picking up properties en bloc," said Mohd Ismail, CEO of PropNex.
The spike in en bloc sale transactions has also contributed to the property boom. In the first half of this year, the Strata Titles Board received a record 45 collective sale applications, compared to 43 for the whole of 2006.
One case stood out; the failed collective sale of Horizon Towers has thrown up questions on how such deals are being sealed. So, industry players welcomed the government's move to tweak laws to make the process more transparent.
The land development charge rates have also been raised from 50% to 70% and analysts said this has cooled the en bloc fever slightly.
To curb speculative activity, the government has done away with the deferred payment scheme on property purchases. It has also released more comprehensive data on both the public and private housing market, in a bid to calm fears of fast escalating property prices.
Industry players said the measures taken by the government have stabilised the property market and there's no concern about it overheating just yet. In addition, the sub-prime crisis unfolding in the US will also make investors more cautious going forward.
However, analysts believe there's still an upside for the property sector in 2008.
They expect prices for both private and public residential properties to grow by between 3 percent and 5 percent per quarter.
"Even though it seems like the market may have peaked, I don't think it will immediately come down... If 2008 prices seem to be coming off, there's always the F1 in October, and it will boost sentiments... Then there's also the first integrated resort," said Colin Tan, analyst at Chesterton International.
The future also looks bright for public housing, with a slew of upgrading programmes to revitalise the heartlands like Punggol and Dawson estates.
The HDB is also expected to build over 10,000 new flats over the next six months to meet rising demand. - CNA /ls
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