Q4 private home prices up the most in 6 quarters

Despite the curbs on housing loan tenure introduced in October, the Urban Redevelopment Authority's private-home price index flash estimate in Q4 2012 galloped at its fastest clip in six quarters, driven by rising prices of mass-market condos.

The latter were, in turn, buoyed by strong public housing resale flat prices.

URA's overall private-home price index in Q4 rose 1.8 per cent from the previous quarter, after a 0.6 per cent gain in Q3. This is the biggest increase since the 2 per cent rise in the index in Q2 2011. For the whole of 2012, the index climbed 2.8 per cent, about half the 5.9 per cent rise recorded in 2011.

Giving a geographical split of prices of non-landed private homes, URA said that the index for the Outside Central Region (OCR) rose 3.4 per cent quarter-on-quarter in Q4, against a one per cent gain in Q3. This is the strongest showing in 10 quarters, since a 5.7 per cent jump registered in Q2 2010.

Some property consultants attribute the OCR's good performance to developers achieving higher price points for projects near MRT stations. Other market watchers, however, reckon that this could have been due to older completed condos in the suburbs slowly catching up with the higher property prices set by new housing projects. More light on what drove up OCR prices in Q4 will be shed on Jan 25, when URA releases more detailed price indices for completed versus uncompleted properties.

For the Rest of Central Region (covering city-fringe locations), the Q4 index was up 0.9 per cent, on a par with the 0.8 per cent rise in Q3. In the Core Central Region - where Singapore's choicest homes are located - the price index rose 0.8 per cent in Q4, compared with a 0.1 per cent rise the previous quarter.

Analysts note that the government's cooling measures, such as the additional buyer's stamp duty introduced in December 2011 and the mortgage tenure curbs in October 2012, have helped put on lid on private-home price growth. Even so, high liquidity and low interest rates continued to draw investors to the property market last year.

These factors should remain in play this year, while rising land bids at recent state tenders would create upward price pressure at new launches. However, the combination of a weaker economy, more completed private homes coming onstream and affordability issues will help rein in price increases, analysts say.

Source: Business Times –3 January  2013