And prices likely to rise further, albeit slower, say analysts
A YEAR of feverish activities in the property market has pushed up the price indices for both private housing and HDB resale flats, as the latest official estimates confirmed what frustrated prospective buyers already know: Property prices are going through the roof.
According to figures released by the Urban Redevelopment Authority (URA) and the Housing and Development Board (HDB) yesterday, the price indices for private residential property and HDB resale flats went up by 31 per cent and 17.4 per cent respectively.
The yearly flash estimates - while still lower as compared to the indices during the 1990s property bubble - contrast sharply with the figures in 2006, which saw prices of private residential properties and HDB resale flats increased by 10.2 per cent and 1.96 per cent respectively.
Still, after months of spectacular price increases, 2007 ended on a relatively muted note as both segments registered slower price increases in the fourth quarter.
Private property prices rose by 6.6 per cent in the fourth quarter, as compared to an 8.3-per-cent increase in the previous quarter, while prices in the HDB resale market increased by 5.6 per cent as compared to 6.5 per cent in the third quarter.
But don’t hold your breath if you hope for property prices to head south, as analysts expect that prices will continue to rise, albeit at a slower rate.
Attributing the slower price increases to the slew of Government policies rolled out to curb speculative activity, Chesterton International’s research director Colin Tan said: “The rate of increase in the first quarter of this year should be even lower. If it isn’t, I’m sure the Government will redouble their efforts to slow it down.”
Still, the months ahead will see the completion of several megaprojects, such as the Marina Barrage, while construction activities for other major investments, such as the world’s largest solar panel manufacturing plant, will be in full swing.
“The influx of skilled professionals will grow stronger, starting from the second half of the year,” said Savills Residential’s director Ku Swee Yong.
While the expected influx of such foreign talent, along with other factors such as strong wage growth and employment, should sustain demand for private property, a slowdown in the US economy could dampen the overall enthusiasm.
According to the URA’s fourth-quarter flash estimates, non-landed private residential properties in the Rest of Central Region (such as Toa Payoh and Rochor Road) and Outside Central Region (suburban areas such as Jurong and Woodlands) rose 7.3 and 7.5 per cent respectively in the 4th quarter, as compared to a 7-per-cent increase in the Core Central region (Orchard area).
The overall increase in the private property price index of 31 per cent last year is the highest increase since 1999, when property prices increased 34 per cent.
Cushman & Wakefield’s managing director Donald Han expects demand for the suburban and mid-tier market to come from buyers who have sold off their properties via collective sales and are now looking to snap up properties in outlying areas.
On the public housing front, the supply of new flats coming on stream is expected to further ease the demand for HDB resale flats, said ERA’s assistant vice-president Eugene Lim.
Still, resale prices are expected to continue their increase “but possibly at a more measured level in the coming months”.
The heightened demand in the past year has led to “unrealistic” sellers demanding high amounts of cash over valuation, particularly for five-room and executive flats. This, in turn, has dampened demand, said Mr Lim.
ERA estimates the resale volume for last year to hover around the 30,000 mark, just a shade above the 29,723 units transacted in 2006.
Noting that the HDB resale price index was the highest since 1996, Propnex chief executive Mohamed Ismail expects the HDB resale market to experience a growth of between 10 and 11 per cent this year.
Commenting on URA’s flash estimates for private residential property, National Development Minister Mah Bow Tan said that while the Government had taken measures to cool speculative fervour in the past few months, there would be “many external factors which are beyond our control”.
Speaking on the sidelines of a visit to the HDB’s first batch of converted rental flats, Mr Mah said: “It’s really up to us to keep a very close eye on the market and to be able to tweak those policy levers in order to keep property prices stable, and if they move, to keep them moving in tandem with the fundamentals.”
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