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mr funny
05-08-08, 10:12
http://www.businesstimes.com.sg/sub/views/story/0,4574,290837,00.html?

Published August 5, 2008

LETTER TO THE EDITOR

URA private home index an anomaly


ANECDOTALLY, private residential property prices in Singapore are now at or near their highest. Paradoxically, however, URA's Private Residential Property Price Index appears to suggest otherwise.

When asked about his outlook for the Singapore residential property market, CapitaLand group president and CEO Liew Mun Leong said: 'In the high-end, there's not going to be massive demand. (In terms of prices) obviously it won't be the $5,600 psf record price that we achieved for a penthouse at Orchard Residences last year. But prices will still be above $3,000 psf.'

He added: 'So prices will still be way above the last peak, pre-Asian crisis.' (BT, Aug 2-3, 2008)

In the last peak pre-Asian financial crisis, units at Ardmore Park, generally accepted as the top-end then, were, with few exceptions, commanding about $2,000 psf only.

In contrast, the mid-range seems now stretch to $3,000 psf. We also see mass market projects priced at up to or beyond $1,000 psf these days. Such price levels also are lofty compared with their 1996 counterparts. Prices for the various landed property segments also are evidently higher now than then.

Yet URA's Residential Property Index for Q208, though at a recent high, is still lower than its 1996 peak. How so? And although its detached and condominium indexes do show marginal gains over 1996's, its semi-detached index is still at a deficit of 20 per cent.

One presumes the URA index to be a quick reference for price levels and trends. A layman may thus glance cursorily at it and jump to certain inappropriate conclusions.

URA should explain this anomaly as an exercise in public education. Or it should review the index's underlying construction to ensure its continued relevance.

Kenneth Pang Cheow Jow

mr funny
15-08-08, 10:13
http://www.businesstimes.com.sg/sub/views/story/0,4574,292453,00.html?

Published August 15, 2008

LETTER TO THE EDITOR

URA index reflects overall price trends


WE refer to the letter 'URA private home index an anomaly' by Kenneth Pang Cheow Jow (BT, Aug 5).

The writer asked why URA's Private Residential Property Price Index (PPI) for second-quarter 2008 was still lower than its 1996 peak, when private residential property prices in Singapore were anecdotally at, or near, their highest.

We wish to inform your readers that the prices highlighted by Mr Pang pertain to selected uncompleted properties which recorded relatively higher prices. These were not representative of the entire private residential market.

For example, in June 2008, a number of uncompleted properties in the Core Central Region (CCR), where most high-end properties are located, recorded median prices of around $1,300-1,800 psf and prices as low as $1,100 psf. Similarly, a number of uncompleted properties in the Rest of Central Region (RCR), generally equated with mid-range properties, recorded median prices of around $800-1,300 psf and prices as low as $700 psf. In the Outside Central Region (OCR), which generally caters to the mass market, a number of uncompleted properties saw median prices of around $700-800 psf, with some prices as low as $600 psf.

Moreover, the anecdotes given by Mr Pang refer mainly to the prices for new sales of non-landed properties. In contrast, URA's PPI takes into account both primary and secondary market transactions of all types of properties. Generally, the median prices of transactions in the secondary market as a whole, which represent about 50-60 per cent of all transactions, are lower than those found in the primary market.

As for landed properties, the prices in Q2 2008 in several areas were still lower than their peak in 1996. These include postal districts 14, 16, 17, 19, 21 and 28.

URA's PPI for private residential properties, both island-wide and for the different market segments (that is, CCR, RCR and OCR), is compiled based on both primary and secondary market transactions for all types of properties. Hence the index gives a balanced picture of overall price trends in the private housing market.

To compute the PPI, transactions are first grouped by characteristics of the properties, including property type and locality, and the median price in each group is used to compute a sub-index. A system of weights based on the historical share of each group of the total transactions is then applied to the various sub-indices to compute the overall index.

We thank Mr Pang for his feedback.

Choy Chan Pong
Director
(Land Administration)
Urban Redevelopment Authority