http://www.straitstimes.com/archive/...rices-20130301
Shoebox units lead gains in resale home prices
Interest buoyed by low interest rates and healthy leasing activity: Experts
Published on Mar 01, 2013
By Esther Teo Property Correspondent
RESALE home prices inched up slightly in January with shoebox units posting the largest gains.
Overall resale prices rose 0.3 per cent compared with the month before, according to flash figures from the Singapore Residential Price Index (SRPI) out yesterday. The index tracks a basket of completed non-landed projects.
This reverses the 0.2 per cent fall in resale prices in December.
Home prices rose across the board with the exception of non-central units which dipped 0.1 per cent. Prices of central units, excluding small units, gained 0.7 per cent. Small units did far better, rising 2.6 per cent.
Experts say that despite the cooling measures in January, home-buying interest remains supported by low interest rates and positive leasing activity.
Shoebox homes - defined by the SRPI as 506 sq ft and below - might have attracted interest as new supply is expected to moderate, noted R'ST Research director Ong Kah Seng.
This is due to rules that took effect last November limiting the number of shoebox units a developer can build on suburban sites.
"Leasing demand for such homes remains healthy especially in the light of lower housing budgets from expatriates... The lower supply of shoebox units in the pipeline might have also diverted interest into completed ones instead," added Mr Ong.
The latest cooling measures could also have caused some investors to turn to small units as they offered a more affordable price quantum, noted Mr Nicholas Mak, head of research at SLP International.
But the resale index for the centrally located homes was more volatile. It contracted 1.5 per cent in December but increased 0.7 per cent in January.
Due to the property market curbs and weaker demand, home prices in the central area are expected to gradually decline by 1 per cent to 3 per cent this year, Mr Mak added.
However, the index for the non-central area declined marginally by 0.1 per cent for the first time since July last year.
But this trend is unlikely to be sustained, with strong demand from HDB upgraders and first-time home buyers continuing to support the market. Prices are likely to rise for the full year, experts say.
"The housing demand in the non-central area is expected to remain strong, therefore the residential property price index for this area is expected to display an upward trend in the coming months," noted Mr Mak.
R'ST's Mr Ong said that overall resale prices are also likely to be "fairly flattish or see a marginal price increase of up to 3 per cent" this year.
Suburban resale apartments, which are priced at a discount to developers' new sales, will also continue to enjoy interest from HDB flat owners, he added.
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