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Published June 29, 2011

Resale prices of private homes accelerate in Q2

Analysts attribute hike to higher prices being quoted by sellers

By UMA SHANKARI


(SINGAPORE) Resale prices of private homes rose at a faster rate across all segments in the second quarter of 2011 compared to Q1, as sellers raised asking prices after benchmarking them against prices at new home launches.

According to an analysis by DTZ Research, the average resale price of leasehold condominiums in Singapore's suburban areas rose 3.9 per cent quarter on quarter in Q2, up from 0.8 per cent in Q1.

And in the upmarket prime districts of 9, 10 and 11, the average resale price of freehold condominiums grew by a slightly smaller 3.3 per cent in Q2, up from 0.4 per cent in Q1. DTZ tracks a basket of completed condominiums to compile its data.

New data from the National University of Singapore (NUS), which also tracks prices of completed projects, also supported the view that resale prices are growing at a faster clip.

NUS's monthly Singapore Residential Price Index showed that prices of non-landed private homes climbed 2.5 per cent in May - up from 1.1 per cent in April and 0.2 per cent in March.

The growth was led by the sub-index for the central region, which showed that prices of non-landed private homes in Singapore's central region (districts 1-4 and 9-11) appreciated by 3.5 per cent in May.

Prices rose by a slightly lower 1.7 per cent in the non-central region.

In April, by contrast, NUS found that prices climbed one per cent in the central region and 1.2 per cent in the non-central region.

Analysts attributed the increase to higher prices being quoted by sellers.

'Asking prices of resale homes continue to trend upwards as sellers benchmarked against the prices of new launches,' said Chua Chor Hoon, DTZ's research head for South-east Asia.

Joseph Tan, executive director for residential at CB Richard Ellis (CBRE), agreed that sellers could be upping their asking prices because some units in new launches in the vicinity of their homes command benchmark prices.

Buyers could also be willing to fork out more for resale homes as there is still a substantial price differential between units in new launches and resale units. This could make resale homes seem more attractive by comparison, Mr Tan added.

DTZ also noted in its analysis that private home sales rebounded after February as the market took the government's January cooling measures in its stride.

An average of 1,605 units were sold per month on the resale market in April and May, higher than the monthly average of 1,383 resale transactions seen in Q1 2011.

Secondary sales are based on caveats lodged, which is voluntary and can be delayed. The monthly average in April and May could be higher when more caveats are lodged later.

'With many new launches creating buying interest, banks offering low mortgage rates and prices continuing to rise, buyers went back to the market in the fear of prices rising further,' said Ms Chua.

But she added that the market was less active in June, partly due to the school holidays and also because of expectations of policy reviews that will affect the housing market following the General Election.

With more caution in the market and as price resistance increases, the pace of price increase is likely to moderate for the rest of the year, DTZ predicted.