Private property prices steepest quarterly increase in 28 years

Today Online. Oct 2, 2009.

The Property Price Index rose 15.9 per cent in the third quarter (Q3) ended Sept 30.

This was a turnaround from the 4.7 per cent decline in Q2. The biggest jump in property prices was recorded in Q1 of 1981, when the index gained 27.2 per cent amid a bull market. Last quarter's price jump is also the sharpest rebound since the index started in 1975.

Figures released by the Urban Redevelopment Authority (URA) yesterday came on the heels of the Government's anti-speculative measures for the property market announced on Sept 14.

As a result, analysts expect market sentiment to dampen in the current quarter, with property prices likely to continue rising but at a steady pace or in the single digits. "That has let some hot air out (of the balloon)," said Cushman and Wakefield Singapore managing director Donald Han.

The year-end property market would also likely see a "seasonal slowdown" in transaction volume and prices as year-end festivities come into play, noted Jones Lang Lasalle's South-east Asia research head Dr Chua Yang Liang.

Colliers International's research and advisory director Tay Huey Ying added that the secondary market is already showing "standoffs between buyers and sellers", contributing to the future moderation of property prices.

Despite a let up in exuberance expected from the market, the significant quarterly price increase is not lost on analysts, who generally attribute the pick up to a confluence of factors. This includes pent up demand, positive sentiment on an improving economy, the recent stock market rally and current low interest rates.

Already, 20,529 private residential units were sold in the first nine months of this year, surpassing 2008's full year total of 13,865, noted Jones Lang Lasalle.

CBRE Research executive director Li Hiaw Ho said the increase signifies a "clear recovery in home prices" after four straight quarters of decline.

Meanwhile, Ngee Ann Polytechnic real estate lecturer Nicholas Mak said the sharp rise in private home prices was contributed mostly by new project launches.

Indeed, all geographical regions showed increases with prices of non-landed private properties just beyond the core central region posting the steepest increase of 19.1 per cent.

Although mass market projects have been in the limelight amid the property run up, Colliers International's Ms Tay noted that there has also been a surge in sales activities for properties at higher price bands of above $2,000 per sq ft (psf).

URA data showed the sales of such properties in July and August have exceeded those sold from April to June by 2.5 times.