Private Home Prices And Rents Down

Source : The Straits Times, Oct 25, 2008

PRIVATE home prices in Singapore fell faster than expected in the third quarter as the global financial turmoil weighed heavily on already weakened market sentiment.

The price slide is expected to continue into next year, property consultants said.

But the HDB resale flat market continued to buck the trend, with prices rising 4.2 per cent in the third quarter following a 4.5 per cent rise in the second quarter.

They have now surpassed the peak seen in the fourth quarter of 1996. But analysts expect this growth trend to slow as buyers turn cautious.

Urban Redevelopment Authority (URA) data yesterday put the private home price dip at 2.4 per cent for the period ended Sept30, the first contraction after 17 straight quarters of growth.

This compares with an initial estimate of a 1.8 per cent drop released by URA earlier this month. In the previous quarter, private home prices rose 0.2 per cent.

The outlook is grim. Since the end of the third quarter, global markets have tumbled further and Singapore officially entered a technical recession. Buyers expecting a full-blown recession are set to become even more cautious, analysts say.

Colliers International's director for research and advisory, Ms Tay Huey Ying, said the lower-than-expected third-quarter private home price figure indicates that sales recorded in the last two weeks of the quarter were done at lower prices.

The price fall was led by luxury homes, as such properties in choice areas like Orchard Road and Sentosa Cove posted a 2.7 per cent fall after slipping just 0.1 per cent in the previous quarter.

Prices of city-fringe homes dropped 2.4 per cent, compared with a 0.7 per cent rise in the the April-toJune period.

Suburban homes, which showed the strongest growth of 0.9 per cent in the second quarter, fell 1.5 per cent in the third. Landed home prices, which inched up 0.6 per cent in the second quarter, fell 1.9 per cent.

In a reversal from relentless rent increases of recent years, rentals of private homes fell by 0.9 per cent compared with a 2.5 per cent rise in the second quarter. Like home prices, the fall in rents was the first after 17 straight quarters of growth.

Mass-market homes saw a bigger fall of 2.7 per cent in rents, compared with 0.7 per cent for coveted high-end homes and 0.5 per cent for city-fringe homes.

The growing market caution was also reflected in resale and sub-sale deals. A total of 1,974 resale deals and 462 sub-sales were done in the third quarter, down from 2,291 resale deals and 518 sub-sales in the previous period.

Given the worsening global financial climate, private homes prices are expected to continue slipping. 'The momentum of home sales will likely slow down due to either the increasing difficulty in obtaining loans or buyers' anticipation of further price cuts,' said CBRE Research's executive director Li Hiaw Ho.

In the HDB market, resale transactions rose 4 per cent to 8,110 sales, amid continued buying from permanent residents and Singaporeans upgrading from a smaller flat or downgrading from a private home.

While the sector is still strong, property experts are expecting slower price growth ahead as current resale prices have hit a new peak. With slower economic growth and possible job losses, buyers are likely to turn more cautious and exercise more prudence by offering less for the flats so as not to overstretch, said ERA Asia-Pacific's associate director Eugene Lim.

On a brighter note, URA revised down its supply figures, dispelling the prospect of a private home oversupply.

Its data also showed that office rents have slipped by 0.8 per cent, compared with 6.3 per cent growth in the second quarter.

Shop rents also dipped 0.6 per cent islandwide in the third quarter, reversing a growth of 5.2 per cent in the second.

Industrial rents rose, but at a slower pace.