SINGAPORE'S booming housing market is the world's hottest this year, with local home prices recording the fastest increase.
Residential property prices in the Republic surged 24.3 per cent, after adjustments for inflation, ahead of other bullish markets such as Shanghai in China and Bulgaria, said property investment research house Global Property Guide. In a report published online, the firm said Singapore's strong performance, like those of Japan and South Korea, was due to robust economic growth.
The survey was compiled using the latest official data from 42 countries, though other statistics were used for a few markets, such as Japan and the Philippines, where such figures were not available.
The latest Urban Redevelopment Authority (URA) numbers used in the survey show that Singapore home prices registered a 27.6 per cent annual jump at the end of September, significantly higher than the 7.6 per cent posted a year ago.
This nominal, non-inflation adjusted figure was below the 30.6 per cent recorded by Bulgaria in September and the 27.9 per cent recorded by Shanghai in October.
But in real terms, after adjustments for low inflation of only 2.66 per cent, the Republic leapfrogged these two markets to reach the top spot, said the report.
Singapore's strong showing underscored a more general recovery in Asia, where several markets gained momentum in the first three quarters of the year.
Global Property said this reflected, to some extent, continued recovery from the 1997 Asian financial crisis.
In contrast, the United States housing market crashed due to the sub-prime mortgage crisis, while high interest rates were behind the slowdown in European house prices.
'In Europe, most countries registered unimpressive year-on-year house price changes in 2007, aside from Norway and Estonia,' the report said.
Looking to the year ahead, Global Property said property prices in much of Asia are still undervalued compared with pre-Asian crisis levels, despite strong increases this year.
It expects potential improvement in rentals in Singapore.
'We believe gross rental yields are now too low, at 2 to 3 per cent.
'Nevertheless, Singapore is attracting and admitting more foreign-born workers - which is positive for prices,' it said.
Elsewhere in the region, Global Property also recommended Cambodia, Thailand, Japan, Australia and New Zealand to property investors.
It, however, cautioned against investing in Europe, apart from a handful of Eastern European states, because of high valuations after a long period of price appreciation.
In the Middle East, it found Egypt attractive for its high rental yields and low taxes, but warned of a possible oversupply in Dubai as more properties come on stream over the next two years.
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STRONG GAINS
While Singapore ranks behind Bulgaria and Shanghai in nominal house price growth, the Republic is the world's best performer in real terms, given its low inflation rate of only 2.66 per cent, says Global Property Guide.
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