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05-01-12, 20:01
http://www.straitstimes.com/PrimeNews/Story/STIStory_751602.html
Private home prices may have peaked
Published on Jan 4, 2012
By Esther Teo, Property Reporter
PRIVATE home prices, which have been defying gravity for the past two years, finally seem to be close to their turning point, inching up by just a smidgen in the three months to December.
Flash estimates released by the Urban Redevelopment Authority (URA) yesterday showed prices rising just 0.2 per cent in the fourth quarter last year, down from a 1.3 per cent gain the quarter before.
Experts note that while this brings home prices to a new high, it is the smallest quarterly growth since the market bottomed out in the second quarter of 2009 and could signal that the market has peaked or is close to doing so.
A series of market cooling measures since September 2009 - most recently last month - global economic uncertainties and a boost in housing supply have provided a check on prices, they add.
They say a price correction could show up as early as the first quarter's URA price index.
PropNex chief executive Mohamed Ismail expects prices to soften further, dipping by 3 per cent to 4 per cent this year.
He said it is 'very likely' that prices might fall by less than 1 per cent by the first quarter although the bulk of the expected correction will take place in the second half of the year.
Developers are also expected to be more cautious about buying land, given the abundant upcoming supply with reduced participation and bid prices likely, said Ms Chia Siew Chuin, Colliers International's director of research and advisory. These will be catalysts for price declines.
DTZ's head of Asia-Pacific research Chua Chor Hoon noted that the luxury segment, which has the largest share of foreigners, is likely to see a greater fall than the mass and mid-market segments.
Mr Ong Teck Hui, head of research and consultancy at Credo Real Estate, said depending on how the economy plays out and how the housing market performs after Chinese New Year, the price index for the three months to March could show either marginal growth or a mild correction.
Demand for new private homes could also be trimmed by up to 20 per cent, as some of the demand could be siphoned away by executive condos (EC), said Mr Li Hiaw Ho, executive director of CBRE Research.
Executive condos are a hybrid of public and private housing. The Government had earlier said that it is ready to supply sites for up to 5,000 EC units through its land sales programme this year.
'Prices of luxury and prime residential properties may fall by 10 per cent to 15 per cent in 2012, and mass market homes by 5 per cent to 10 per cent,' he added.
'Separately, landed home prices will likely see a smaller correction of less than 5 per cent since foreigners are generally not allowed to buy and supply is limited.'
Overall, home prices increased 5.9 per cent last year, well below the 17.6 per cent growth in 2010 as the Government rolled out five rounds of cooling measures, the latest on Dec 8.
But as with the previous quarter, non-landed suburban homes continued to post the biggest price gain. They rose 0.6 per cent in the fourth quarter, but this was well down from a 2.1 per cent jump in the three months before.
ERA Realty key executive officer Eugene Lim said that this could be due to healthy sales at projects like Bedok Residences and The Palette in Pasir Ris.
There was no change in city fringe home prices which grew 1.2 per cent previously, while city centre home prices were up 0.5 per cent, down from 0.7 per cent before.
ERA's Mr Lim said the increase in city centre prices might be due to sales at The Scotts Tower and Scotts Square while city fringe prices remained flat due to a lack of large-scale project launches.
Experts point out that the flash estimates are compiled based on transactions during the first 10 weeks of the quarter, with the Dec 8 cooling measures - which include an additional buyer's stamp duty of 10 per cent for all foreigner home purchases - unlikely to have made an impact on the figures yet.
The URA also cautioned that past data has shown that the difference between the quarterly price changes indicated by the flash estimate and actual price changes - updated about four weeks later when more data on the caveats lodged and the take-up of new projects is captured - could be significant when the change is small.
Private home prices may have peaked
Published on Jan 4, 2012
By Esther Teo, Property Reporter
PRIVATE home prices, which have been defying gravity for the past two years, finally seem to be close to their turning point, inching up by just a smidgen in the three months to December.
Flash estimates released by the Urban Redevelopment Authority (URA) yesterday showed prices rising just 0.2 per cent in the fourth quarter last year, down from a 1.3 per cent gain the quarter before.
Experts note that while this brings home prices to a new high, it is the smallest quarterly growth since the market bottomed out in the second quarter of 2009 and could signal that the market has peaked or is close to doing so.
A series of market cooling measures since September 2009 - most recently last month - global economic uncertainties and a boost in housing supply have provided a check on prices, they add.
They say a price correction could show up as early as the first quarter's URA price index.
PropNex chief executive Mohamed Ismail expects prices to soften further, dipping by 3 per cent to 4 per cent this year.
He said it is 'very likely' that prices might fall by less than 1 per cent by the first quarter although the bulk of the expected correction will take place in the second half of the year.
Developers are also expected to be more cautious about buying land, given the abundant upcoming supply with reduced participation and bid prices likely, said Ms Chia Siew Chuin, Colliers International's director of research and advisory. These will be catalysts for price declines.
DTZ's head of Asia-Pacific research Chua Chor Hoon noted that the luxury segment, which has the largest share of foreigners, is likely to see a greater fall than the mass and mid-market segments.
Mr Ong Teck Hui, head of research and consultancy at Credo Real Estate, said depending on how the economy plays out and how the housing market performs after Chinese New Year, the price index for the three months to March could show either marginal growth or a mild correction.
Demand for new private homes could also be trimmed by up to 20 per cent, as some of the demand could be siphoned away by executive condos (EC), said Mr Li Hiaw Ho, executive director of CBRE Research.
Executive condos are a hybrid of public and private housing. The Government had earlier said that it is ready to supply sites for up to 5,000 EC units through its land sales programme this year.
'Prices of luxury and prime residential properties may fall by 10 per cent to 15 per cent in 2012, and mass market homes by 5 per cent to 10 per cent,' he added.
'Separately, landed home prices will likely see a smaller correction of less than 5 per cent since foreigners are generally not allowed to buy and supply is limited.'
Overall, home prices increased 5.9 per cent last year, well below the 17.6 per cent growth in 2010 as the Government rolled out five rounds of cooling measures, the latest on Dec 8.
But as with the previous quarter, non-landed suburban homes continued to post the biggest price gain. They rose 0.6 per cent in the fourth quarter, but this was well down from a 2.1 per cent jump in the three months before.
ERA Realty key executive officer Eugene Lim said that this could be due to healthy sales at projects like Bedok Residences and The Palette in Pasir Ris.
There was no change in city fringe home prices which grew 1.2 per cent previously, while city centre home prices were up 0.5 per cent, down from 0.7 per cent before.
ERA's Mr Lim said the increase in city centre prices might be due to sales at The Scotts Tower and Scotts Square while city fringe prices remained flat due to a lack of large-scale project launches.
Experts point out that the flash estimates are compiled based on transactions during the first 10 weeks of the quarter, with the Dec 8 cooling measures - which include an additional buyer's stamp duty of 10 per cent for all foreigner home purchases - unlikely to have made an impact on the figures yet.
The URA also cautioned that past data has shown that the difference between the quarterly price changes indicated by the flash estimate and actual price changes - updated about four weeks later when more data on the caveats lodged and the take-up of new projects is captured - could be significant when the change is small.