SINGAPORE: Prices of completed homes increased by 11.9 per cent for year 2010.
As for month-on-month increase in December, prices grew 0.9 per cent overall.
This is according to the latest National University of Singapore (NUS) Singapore Residential Price Index (SRPI).
Analysts said that demand in the secondary residential market remains buoyant.
The NUS Singapore Residential Price Index covers only non-landed and completed homes.
Completed non-landed homes in the central region grew by 7.8 per cent on-year
In the non-central region, prices of such homes grew even more at 15 per cent on-year. For the fourth quarter of 2010, overall prices grew 0.3 per cent on-quarter.
Q4 2010’s central region home prices dropped by 1.3 per cent, with non-central region home prices registering a 1.5 per cent increase on quarter.
But Q4 2010’s prices have surpassed the last peaks in November 2007 by 8.7 per cent. For the non-central region, prices have surged last peak levels by 17.1 per cent.
Home prices in the central region still lag last peak levels by 3.8 per cent.
Analysts said a healthy resale market is evidence of strong owner-occupier demand, considered by experts to be a barometer of genuine buying interest.
“Some of the transactions there are mostly real transactions. There are asset-backed transactions in there. It reflects the mood of the real market and the real economy – the secondary market in other words – less speculative, unlike new launches which are bought on future supply and future completions,” said Dr Chua Yang Liang, head of Research Southeast Asia, Jones Lang LaSalle.
Despite a near 12 per cent increase in 2010, analysts said this is modest compared with a 42 per cent jump from 2006 to 2007.
They said the sharp jump is reflective of exuberance in the property market, right before the sub-prime crisis hit in 2008.
“Certainly we have seen a percentage contribution by foreigners increasing from 22 per cent as a percentage of total transactions to 26 per cent in 2010. The remaining 74 per cent are by Singaporeans, so I would say Singaporeans have played a greater part in pushing price growth,” said Tay Huey Ying, director of Research & Advisory, Colliers International.
But with the new cooling measures, home buyers may only afford cheaper but much smaller homes.
Shoebox units with a size of below 500 square feet have been popular of late. For example, Viva Vista saw 80 per cent of its 144 units sold during a preview in August last year.
Tay said: “With the cut in LTV (loan-to-value) to 60 per cent for those with one or more outstanding loans, we are seeing demand for the small format apartment type. And this may give the signal to the developer that these small format apartments are in demand, and they may continue to plan for an increasing quantum of small format apartments.
“I feel that the government should take into consideration – is this the direction that we should move towards for the residential landscape.”
And with the robust growth and low interest rates, analysts expect price growth to moderate to between 4 and 8 per cent this year, led by the high-end to mid-tier property segment.
Source – CNA /ac/ls
Food for thought: While many home buyers and investors are “speculating” that home prices will drop in the near future because of the recent cooling measures. Many are holding on to their purchases. Few of my clients also feels that market will “cool down”. I wonder whether they are basing on trends, statistics or overall market analysis, as I do not think prices will drop drastically, if not stabilised.
In fact, I think prices will continue to go up steadily, if not now. So for folks who do not commit now, especially if they seen a suitable unit, chances are that the unit will be taken up or worst still, prices would go up further, making it more “painful” to invest in the same house at a much higher price.
I can’t over emphasise the importance of financial education and yet, I see this behaviour everyday. They will soon understand when it is a pinch to pay more later. Awesome!