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07-04-12, 23:21
http://www.straitstimes.com/Money/Story/STIStory_783718.html

4.7% drop in luxury home prices for 2011

Cooling measures, fears over global economy cited as reasons for fall

Published on Mar 31, 2012

By Magdalen Ng


PRICES for luxury homes here fell 4.7 per cent last year - a grim reversal from the 18 per cent rise they enjoyed in 2010, according to a global report yesterday.

The property cooling measures and fears over the global economy were cited as reasons for the fall in values here.

There were no such excuses needed for Kenya's capital Nairobi, where the prices of posh homes shot up a world-beating 25 per cent.

The Kenyan coast was next, with a 20 per cent jump, with Miami's prices rising 19.1 per cent.

Hong Kong and New York both recorded increases of less than 5 per cent, according to the Wealth Report 2012 compiled by Citi Private Bank and property consultancy firm Knight Frank.

Luxury home prices in Mumbai fell the most last year, dropping 18.1 per cent.

The report also found that luxury homes here were the 13th most expensive in the world, down from 10th last year.

As of the end of last year, the average price in Singapore's luxury home segment was US$25,600 (S$32,200) per sq m (psm). This works out to about US$2,379 per sq ft (psf).

The average price in Monaco topped the list at US$58,300 psm (US$5,418 psf), with Cap Ferrat in southern France second at US$51,800 psm (US$4,814 psf), and London third at US$48,900 psm (US$4,544 psf).

Experts say the fall in prices here may be because the data was collected on the back of the latest and toughest round of property cooling measures in December last year.

Mr Png Poh Soon, Knight Frank's head of research and consultancy, said worries over the deepening euro zone debt crisis at the end of last year may also have played a part.

However, with private home sales last month reaching a record high, Mr Png does not rule out a further round of cooling measures, or a further tightening of the existing measures.

He said: 'Three months down the road, we have noted that the impact of the additional buyer's stamp duty on subsales activities has caused the number of foreign buyers to drop.

'But what is the reason they (the additional measures) are not working? It is something the Government cannot control - interest rates.'

The Swap Offer Rate and the Singapore Interbank Offer Rate, to which mortgages are usually pegged, have been hovering near all-time lows - meaning home loans at rock-bottom rates.

Urban Redevelopment Authority data shows that the prices of all private homes, from mass-market to luxury, went up by 5.9 per cent from a year ago.

In the core central region, which refers to the prime districts 9, 10 and 11, the Central Business District and Sentosa, apartment prices went up just 4 per cent last year, compared with an increase of 14.2 per cent in 2010.

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