Home Prices Growing, But Less Sharply

Source : The Straits Times, Apr 2, 2008

HOME seekers waiting for property prices to fall in a sluggish market were disappointed by numbers released yesterday.

Government estimates showed that the prices of private and Housing Board homes continued to rise in the first three months of the year to near their 1996 peaks.

But growth was markedly lower than before and is likely to slow further in coming months, experts said.

Some even suggested that home prices may start to ease later this year - for the first time in four years - if the Singapore economy brakes more sharply than expected.

Mr Nicholas Mak, director of research and consultancy at Knight Frank, was among industry watchers who had expected prices to plateau or even dip in the first quarter, after developers reported dismal sales of new homes in January and February.

But prices held stubbornly, backed by a still healthy economy, some new launches at benchmark prices and the reluctance of sellers to lower asking prices.

However, the number of home sales plunged from last year, leading consultants to warn that yesterday’s price figures are based on fewer deals and may not be representative of the whole market.

They added that buyers willing to take the plunge now are mostly genuine occupiers, with speculators having almost completely exited.

Private home prices climbed 4.2 per cent in the first 10 weeks of the year, down from 6.8 per cent in the previous quarter and the smallest rise since 2006. Suburban home prices gained the most, rising 4.8 per cent.

HDB resale flats also saw a smaller increase in prices: 3.4 per cent, compared with 5.7 per cent previously.

The ‘weaker than expected’ growth comes amid continued volatility in global stock markets and a weaker Singapore market outlook, said Mr Chua Yang Liang, Jones Lang LaSalle’s head of research for South-east Asia.

But Ms Tay Huey Ying, director of research and consultancy at Colliers International, called the price growth ‘very encouraging’, given the few transactions.

Property consultants took the chance yesterday to cut their forecasts for price growth for the whole year.

Most now predict single-digit rises compared with their earlier estimates of growth between 10 and 20 per cent. Last year, private home prices soared 31 per cent while HDB resale prices jumped 17.5 per cent.