April 24, 2010
Private home prices up more than expected
Much of Q1 price growth originates from landed property
PRIVATE home prices rose more than expected in the first quarter of
2010, with landed properties putting up a strong showing. Rents also
climbed surprisingly, leading to greater optimism in the market.
SNAPPED UP
At Tree House, City Developments' latest project at Chestnut Avenue,
over 85 per cent of the 350 units rolled out have been taken up, at
prices of around $800 per square foot.
Data from the Urban Redevelopment Authority yesterday showed that private
residences were 5.6 per cent more expensive compared with a quarter
ago. This exceeds the flash estimate of 5.1 per cent released earlier
this month.
Still,
the Q1 increase is smaller than the 7.4 per cent hike in Q4 last year,
which spurred the government into introducing more measures to rein
in sentiments in the housing market.
Sub-sale
activity - a signal of speculation - also dipped in Q1. Sub-sales accounted
for 8.5 per cent of all sale transactions, down from 11.6 per cent in
Q4.
The
cooling measures have been 'effective in keeping short-term speculators
at bay' and have 'helped to take some pressure off prices', said Colliers
International research and advisory director Tay Huey Ying.
Price
resistance has also set in, since home prices have exceeded the lows
in Q2 last year by more than 30 per cent, she added.
Much
of price growth in Q1 originated from landed property. Prices in that
segment went up by 8.3 per cent, at the same rate as in Q4.
Prices
rose most for detached houses, by 9.6 per cent. Prices for semi-detached
and terrace houses followed with 7.5 per cent and 7.4 per cent increases
respectively.
Demand
for landed property has been high and there have been many transactions,
said RealStar Premier Property managing director William Wong. Such
houses can have lower per square foot (psf) prices compared with condominium
units and that could have attracted buyers, he suggested.
Colliers'
Ms Tay added that the supply of landed property has always been limited,
so this would provide a support to prices.
Despite
the strong growth, landed property prices have yet to breach the historical
high seen more than 10 years ago. The price index for this segment in
Q1 was 176.3, about 9 per cent below the 193.4 in Q2 1996.
Over
in the non-landed home segment, prices grew by 4.9 per cent in Q1, at
a slower pace compared with 7.2 per cent in Q4.
Residences
in the Rest of Central Region (RCR) led the increase, with prices going
up by 7.9 per cent. Prices in the Core Central Region (CCR) and Outside
Central Region (OCR) rose 4.4 per cent and 4.3 per cent respectively.
Consultants
are optimistic about how private home prices and sales volume will fare
this year. CBRE Research executive director Li Hiaw Ho pointed to the
sharp economic growth in Q1, saying this 'makes for much positive market
sentiment in the coming months'.
Developers
managed to sell 4,380 new homes in Q1, more than twice the 1,860 in
Q4, he said. 'If the pace of sales continues throughout the year, the
total sales of new homes could even be comparable to last year's volume
of 14,688 units.'
Property
launches this month continue to prove hot. City Developments said yesterday
that at Tree House, its latest project at Chestnut Avenue, over 85 per
cent of the 350 units rolled out have been taken up. Prices were around
$800 psf, and buyers snapped up all two-bedroom and two-bedroom-plus-study
units.
More
launches are set to come. For instance, Frasers Centrepoint plans to
launch the former Flamingo Valley site in early May.
In
terms of prices, Colliers' Ms Tay expects further increases ahead. They
could breach the peaks in Q2 2008 and Q2 1996 by the next quarter, given
they are just 1.4 per cent and 3.5 per cent below those highs respectively,
she said.
Also,
'future price appreciation looks likely to be supported by a corresponding
rise in rents', she said.
In
Q1, rents of private homes increased by 4.7 per cent quarter on quarter,
up from 0.6 per cent in Q4. Going by regions, across CCR, RCR and OCR,
rents grew 5.3 per cent, 4 per cent and 4.8 per cent respectively.
Ms
Tay believes rents could climb further - leading to a 10-15 per cent
rise for the whole of 2010 - as companies reactivate hiring plans and
more expatriates arrive on Singapore's shores.
CBRE
Research's Mr Li suggested that residential rents could have bottomed
out. 'Anecdotal evidence suggests an increase in the hiring of expatriate
staff in the financial services and bio-medical sectors as economic
fundamentals improve which in turn, have translated to the increase
in rents,' he said.
