The residential property market continued to chalk up strong gains in 2007.
It was the high-end segment that took the lead, with prices there jumping by as much as 55% this year. But towards the second half, prices in the mass market started to catch up.
Analysts say this is the segment to look out for in 2008.
New high-end residential launches like St Regis kept the momentum going this year, with prices hitting new benchmarks as the months wore on.
But those staggering numbers could not put a dent in the frenzied buying that went on.
Knight Frank's director for consultancy and research, Nicholas Mak, said: "It has been a wonderful year for developers, especially those involved in residential properties. Residential sales this year have actually hit a record high, we haven't seen anything as high as this. The typical 10-year average is about 7,200 private homes sold a year. This year, we're gonna see slightly more than double that figure."
Analysts say this was reminiscent of the mid 1990s.
Knight Frank's Nicholas Mak said: "Some of the sharp spikes in property prices brought back memories of the similar run-up in the mid 1990s when the government came in with anti-speculation measures, and it was followed by the Asian financial crisis.
"Interestingly, now it's 10 years after the Asian financial crisis and we also have a similar bull run in the property market. The government has come in with some measures and thankfully they are not as heavy-handed as the anti-speculative measures of 1996. There's question of whether history will repeat itself, but thankfully it looks like it won't."
Things at the top end appear to be cooling as the year end approaches.
Cushman & Wakefield's managing director, Donald Han, said: "If you look at just the last 3, 4 months of the year, prices for the top end, especially, have started to stabilize, and we see the bulk of the residential prices and activities dominated by the mass market segment. So we think moving forward over the next 12 months in 2008, we expect a single-digit or potentially a 10 to 12 per cent increase in terms of capital values for the high end (segment)."
Mass market homes are expected to surpass that, with growth rates of 10 to 15 per cent next year.
Property watchers say the government has done well so far in handling the property boom.
Cushman & Wakefield's Donald Han said: "The government has been very successful in managing the rise and trying to come up with more information in educating the public and investors as to what the median and average prices are. Information does provide a certain kind of ammunition for buyers, so you know you're not overpaying and don't have to rush out to buy on hearsay statistics. At the same time some of the incentives the government has taken out which were more targeted......like deferred payment."
"Sometimes it's not just the measure itself. It's the signal that's sent. For example, the removal of the DPS (deferred payment scheme) is interpreted as the government is stepping in to remove speculation, and indeed the speculation level has come down," he added.
The government is also releasing more residential sites for sale in its Land Sales Programme and rolling out plans for more HDB flats to be sold.
It is putting eight suburban sites on its confirmed list for the Government Land Sales programme for the first half next year.
It has also rolled out plans for some 6,000 public housing units for the same period.
This is largely seen as a move to prevent prices in the residential mass market from rising too sharply.
With the government keeping a close eye on the market, analysts are dismissing talk of a property bubble.
They say the fundamentals remain strong.
Knight Frank's Nicholas Mak said: "In the regional property market, we are somewhere ahead of Shanghai in the property cycle. We are still in the rising phase although our prices are increasingly reaching mature levels. For some other markets like Jakarta, Malaysia, their price increases have already experienced a longer period, they're actually experiencing a more mature stable rate of growth. It's only a matter of time before we reach that stage."
Analysts say the major risk to current growth is the possibility of a US-led global recession. However, while this could lead to a slowdown, they say it will not completely derail the market. - CNA/ir
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