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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.”

Source : Today - 3 Jan 2008

The government will continue to monitor the residential property market in a bid to ensure that prices remain stable, according to National Development Minister Mah Bow Tan.

He was responding to questions from reporters on Wednesday for his outlook for the property sector in 2008.

He noted that the government had taken measures last year to cool the sector, but also said that there are external factors at play in 2008.

Mr Mah said: “It’s not my job, neither is it my ability to predict prices. All I can say is that we monitor the price situation very carefully and over the past months, the government has taken several steps to try to cool down the strong speculative fervour that was taking place earlier in the year. Those are the internal factors.

“As you know, there are also many external factors that could affect property prices. Those are external factors which are beyond our control, so we don’t really know how the sub-prime crisis is going to pan out. We don’t know what’s going to happen to the American economy this year.

“What we do know is for Singapore and we are optimistic that we will continue to do well. It’s up to us to keep a close eye on the market to ensure prices remain stable and move in tandem with the economy.”

Source : ChannelNewsAsia - 2 Jan 2008

Private residential property prices rose by a slower pace in the fourth quarter - up 6.6 per cent compared with the previous three months.

Meanwhile resale prices for public housing or Housing and Development Board flats grew by 5.6 per cent in the fourth quarter.

That’s also at a slower pace, down from 6.6 per cent in the previous quarter.

Analysts believed this was due to the uncertainty over the economic outlook and the government’s measures to cool the property market.

Prices of private residential properties continued to climb in the final quarter of last year, but at a slower rate and analysts said this was not totally unexpected.

Nicholas Mak, Director of Knight Frank, said: “The figures are quite in line with our expectations - we expect prices to continue to expand but at a slower pace - this is because 2007, the private home prices (rose) at a very fast rate and we think that this is not sustainable.”

He added: “Going forward 2008 and 2009 we expect (that it) will continue to expand but at a slower and more sustainable growth.”

Prices rose by about 7 per cent across the board, but it is those outside the core central region that’s taking the lead, with a 7.5 per cent climb.

This includes areas such as Bukit Batok and East Coast.

The core central region saw seven per cent growth, rest of central region was 7.3 per cent, and outside Core Central Region 7.5 per cent.

Analysts said this trend of rising prices in outlying areas is likely to continue into 2008.

Donald Han, Managing Director of Cushman and Wakefield, said: “Well I think if you look at the statistics itself, most of the price increase that we have been seeing is from outside of the central region as well as the fringe area which dominated in the price increase over the last six to 12 months.”

He added: “On top of that I think we are also seeing some re-investment money coming from those who are affected by the collective en bloc - looking into downsizing - looking at outlying areas in terms of affordability.”

Private residential home prices rose by 31 per cent in 2007.

Meanwhile, HDB resale prices grew by 5.6 per cent in the fourth quarter, taking the total climb for the year to 17.4 per cent.

Source : ChannelNewsAsia - 2 Jan 2008

A redevelopment site along Changi Road spanning 26,500 square feet is up for sale by tender.

The site can be redeveloped into a hotel or commercial development with a plot ratio of 3, giving a maximum gross floor area of about 80,000 square feet.

Civil engineering and property development firm Koh Brothers, which is selling the site, is asking for S$55 million.

This excludes a development charge of S$12.5 million which the successful developer will have to fork out.

The price works out to about S$850 per square foot per plot ratio.

The tender exercise will close at the end of this month.

Source : ChannelNewsAsia - 2 Jan 2008

The Housing and Development Board (HDB) has identified three additional sites to be released under the Design, Build and Sell Scheme (DBSS) in the first half of this year.

These sites are in Simei, Toa Payoh and Bedok.

This was revealed on Wednesday, together with the announcement that HDB resale prices rose by 5.6 percent in the fourth quarter of last year.

The three sites have an estimated yield of about 1,500 units.

This follows the announcement in late November that the HDB will ramp up supply of public housing units in the first half of 2008, including 4,800 new units under the Build-to-Order Scheme.

Source : ChannelNewsAsia - 2 Jan 2008