http://www.businesstimes.com.sg/arch...8-may-20140701
Published July 01, 2014
NUS price index for private homes up 0.8% in May
Increase marks first gain for Overall SRPI after 9 consecutive months of declines
By Kalpana Rashiwala
[email protected] @KalpanaBT
NATIONAL University of Singapore's (NUS) price indices for completed non-landed private homes rose month on month in May, after straight declines for several months. Its latest flash estimate shows that the Overall Singapore Residential Price Index (SRPI) rose 0.8 per cent in May from the revised value for April - after slipping one per cent in April over the previous month.
The increase marked the first gain for the index after nine consecutive months of declines between August 2013 and April this year. May's flash estimate is down 6.3 per cent from the recent peak in July 2013. Year on year, the May index value is down 6 per cent.
Commenting on the month-on-month appreciation based on the May flash estimate, associate professor Lum Sau Kim of the university's Department of Real Estate said the May indices were "perhaps boosted in part by the more active sales in the primary market during May".
"Going forward, the lower activity that is often the case in June may result in a small dip in the indices.
"Our general view based on the evidence thus far suggests that the market seems to be moderating slowly, with price levels that are still high due to the strength of holding power of many participants. The effects of newly completing supply have yet to kick in to induce larger price corrections for completed non-landed private homes," she added.
SLP International executive director Nicholas Mak too predicted that the Overall SRPI may contract in June. "Buying demand would be weaker in June due to the school holidays and the World Cup drawing the attention of market participants away from the real estate market," he said.
Savills Singapore research head Alan Cheong said that amid current anaemic transaction volumes, data interpretation becomes tricky. Illustrating his point, he said that raw caveats information from the URA Realis system shows the overall average transacted resale price for non-landed private homes fell 6.2 per cent year on year in May 2014. However, if one were to do a finer split by regions and size, the picture changes.
"For example, take URA's Core Central Region (CCR), which most observers are very negative about. In May, the average transacted resale price for units 70 sq metres and below, actually went up 6.9 per cent year-on-year. It is only for units larger than 70 square metres (753.47 sq ft) that recorded a 5.4 per cent price decline.
"The same price behaviour is exhibited for the Rest of Central Region and Outside Central Region."
In the face of the total debt servicing ratio (TDSR) framework introduced in June last year, developers have been building smaller units to achieve aggressive per square foot prices. "The resale market takes its cue from the primary market, ie, resale prices for completed units fare better for smaller units than bigger units," he added.
"Here, we are simply using raw data without subjecting it to more sophisticated data management tools. With developers dynamically reacting to policies like the TDSR framework, today, they are likely to build on average smaller units than they had launched as recently as a year ago. If the policies get tweaked, they will react accordingly. There is no foolproof way for any index to capture the entire dynamics of the market," said Mr Cheong.
NUS's flash estimates yesterday showed the SRPI for Central Region (excluding small units of up to 506 sq ft) rose 0.7 per cent month on month in May, after easing 0.1 per cent in April. The latest May flash estimate reflects a 7.5 per cent year-on-year drop.
Central Region is defined as districts 1-4 (including the financial district and Sentosa Cove) and the traditional prime districts 9, 10 and 11 by the university's Institute of Real Estate Studies, which minted the SRPI series tracking prices of completed private apartments and condos (excluding executive condos).
The sub-index for Non-Central Region, again excluding small units, rose 0.8 per cent in May after sliding 1.9 per cent in April. The May figure translates to a 5 per cent year-on-year drop.
Prices of small apartments and condo units (up to 506 sq ft) islandwide climbed 0.8 per cent in May - against April's one per cent decrease. Year-on-year, the drop is 3.1 per cent. This is the smallest decrease of the four indices.
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