URA Mulls Over Monthly Index On Private Home Prices

Source : The Business Times, March 18, 2008

The Urban Redevelopment Authority (URA) is mulling over the possibility of releasing the price index for private homes, at least for non- landed properties , on a monthly basis instead of just on a quarterly basis as it does currently, BT understands.

When contacted, a URA spokeswoman said: ‘We are studying the possibility. We will let you know when a decision has been made.’

In the meantime, URA will issue the flash estimate for the Q1 2008 private home price index on April 1, as usual, the URA spokeswoman added.

Market watchers gave mixed reactions to the idea of URA releasing its private home price index every month. Some say this would complement the monthly developer sales data, while others suggest that the idea may not be such a good thing in today’s quiet market.

‘There may not be enough launches and property transactions to compute an index monthly in a quiet market,’ said a seasoned property consultant. ‘If the market turns, it may not be a good idea to keep reminding people every month that the index is going down or the volume of transactions is falling. That may accelerate the decline. It’s psychological.’

But some players argued that this move could complement URA’s monthly release of developers’ sales data.

‘The developer sales data shows a median price, which may not be reflective of the market since it depends on the type of units (including how they face and whether they have private enclosed spaces/ roof terraces) sold in a development in a particular month. Whereas the formula for a price index is more rigorous than a simple median price and provides a more accurate picture of actual price trends in the market,’ says Colliers International’s director of research and consultancy Tay Huey Ying.

She reckons that because an overall price index will be based on both primary and secondary market transactions, the volume of transactions should be enough for a monthly computation.

Currently URA publishes developers’ private home sales data for each month in the middle of the following month on its website. However, if the authority decides to go ahead with issuing the price index for private homes on a monthly basis, it is likely that both information releases will be at the same time to avoid confusing the public, market watchers suggest.

They also say that if URA decides to go monthly with its price index, they would not be surprised if the Housing & Development Board also broadcasts its resale flat price index on a monthly basis.