Published November 30, 2010

[B][SIZE="5"]Non-landed private home prices fall 0.7% in October[/SIZE][/B]

[B]Drop was caused by falling prices in the central and non-central locations[/B]


PRICES of non-landed private homes fell 0.7 per cent in October, according to the monthly index compiled by the National University of Singapore (NUS).

NUS' Singapore Residential Price Index (SRPI) shows overall home prices fell last month, after having climbed 1.1 per cent per month in both August and September.

The last time the overall index fell was in July, when it dipped 0.1 per cent. NUS has been compiling the index since March this year.

October's drop was caused by falling prices in the 'central' and 'non-central' locations.

Home prices in central locations fell 1.1 per cent last month, after climbing 0.9 per cent in September. The central SRPI last fell in July, by 0.8 per cent.

And in a sign that the slowdown in the property market is now spreading to the mass market segment, the non-central SRPI dipped 0.5 per cent in October - the first time it has fallen since NUS started compiling the index. The non- central SRPI rose 1.3 per cent in September.

Year-to-date, the overall SRPI is up 10.7 per cent. Non-central prices are up 12.8 per cent, while prices in the central region have climbed a smaller 8.1 per cent.

The October flash estimate for the central region is now 3.6 per cent below its pre-financial crisis high in November 2007.

However, for the non- central region, the latest index has surpassed its pre- crisis peak in January 2008 by 14.9 per cent.

As a result, the overall SRPI flash estimate for October is 7.6 per cent above its November 2007 high.

Looking ahead, analysts expect mass market home prices to moderate further, given the impending large supply of development sites being offered for sale by the government.

'Most of the sites in the H1 2011 Government Land Sale programme will inject supply to the mass market segment, and this may rein in mass market home prices,' said Christine Sun, senior manager at Savills Research & Consultancy.

But it will have little impact on the mid-tier and luxury home prices, which could rise further, given the positive economic outlook for next year, she said.

DMG & Partners Research analyst Brandon Lee, for example, expects a 10 per cent fall in mass market home prices due to supply and continued policy risks.

NUS' index, which is compiled by the Institute of Real Estate Studies, was launched to serve as a resource for developing property derivatives in Singapore.

It is computed using the market values of a basket of completed properties.

Uncompleted projects are not included in the basket, as price movements for such projects can be different from those in the rest of the market.

But the impact of new launches on the prices of completed properties in the vicinity is factored in.