Private home prices may have peaked
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URA flash estimates show private home prices up 0.4% in Q2
By Channel NewsAsia | Posted: 01 July 2008 1505 hrs
SINGAPORE: Private residential property prices rose 0.4 per cent in the second quarter of this year, according to flash estimates released by the Urban Redevelopment Authority (URA) on Tuesday.
The rise followed a 3.7 per cent increase in the first quarter.
Prices of non-landed private residential properties increased by 0.2 per cent in the Core Central Region, 0.7 per cent in the Rest of Central Region and 1.3 per cent Outside Central Region in the second quarter of the year.
In comparison, for the first quarter of 2008, prices of non-landed private residential properties increased by 3.8 per cent in the Core Central Region, 3.3 per cent in the Rest of Central Region and 3.8 per cent Outside Central Region.
Analysts noted that the softening prices contributed to a pick up in sales towards the end of the second quarter in some attractively located and reasonably-priced projects launched.
Ms Margaret Thean, DTZ's Executive Director for Residential, said: "This is clearly indicated by the sell-out status of projects such as Suites 123, while Nassim Park, Parc Sophia, Dakota Residences and Clover by the Park received encouraging response."
However, with the uncertain economic outlook and high inflation, developers are holding off on launches, while homebuyers look for bigger discounts.
DTZ expects further price corrections in private residential properties going forward. Domestically, property-watchers said the speculation that caused previous highs has died down.
On the supply side, as at first quarter of 2008, there were about 67,700 private residential units in the pipeline, of which about 56,500 new private housing units are expected to be completed between 2008 and 2011.
About 42,700 units of the supply in the pipeline (or 63 per cent) have not been sold by developers yet.
In public housing, the prices of HDB resale flats rose 4.4 percent in the three months to June, over the previous quarter. This is slightly higher than the 3.7 percent increase in the first quarter.
URA's flash estimate is based on data for the first 10 weeks of the quarter. The price index for the full quarter will be issued later this month.
- CNA/yb
Mass market stays buoyant as buyers find price is right
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Published July 2, 2008
Mass market stays buoyant as buyers find price is right
Flash estimates for Q2 show overall private home prices flattening; steady HDB resales keep mass market more active
By ARTHUR SIM
(SINGAPORE) Flash estimates for property price indices are in with numbers suggesting that price-sensitive buyers are bargain hunting or scaling down their expectations altogether.
The Urban Redevelopment Authority (URA) released estimates for the Q2 2008 price index for private residential property yesterday with prices rising just 0.4 per cent - a mere crawl compared to the 3.7 per cent increase in the previous quarter.
While this represents the slowest growth in four years, Jones Lang LaSalle's local director and head of research (South East Asia) Chua Yang Liang also notes that it is the, 'steepest' quarterly rate of change since Q3 2000.
Much of the activity was in the mid and mass-market as reflected by URA's index for three geographical regions. Prices of non-landed private residential properties increased by just 0.2 per cent in Core Central Region (CCR) and 0.7 per cent in Rest of Central Region (RCR), but climbed a more robust 1.3 per cent in Outside Central Region (OCR).
Dr Chua added that demand remained favourable in the OCR supported by average nominal wage increases in the Q1 2008 and 'dislodged residents of collective sale sites'.
Also robust was the Housing and Development Board's (HDB) resale market with estimates for the quarter revealing that the HDB Resale Price Index increased by 4.4 per cent over the previous quarter, and higher than the 3.7 per cent increase in Q1 2008.
Knight Frank director (research and consultancy) Nicholas Mak said that the mass market is 'influenced' by HDB's resale market and added that, 'the resale market has been steady'.
Indeed, while HDB resale volume did fall to 6,360 units in Q1 2008, a 6 per cent drop compared to Q4 2007, it actually increased by one per cent on a year-on-year (y-o-y) basis.
By comparison, secondary market private property transactions of 2,304 units in Q1 2008 was a fall of about 40 per cent, quarter-on-quarter (q-o-q) and a fall of 57 per cent, y-o-y, while primary market transactions of about 762 units was a fall of about 48 per cent in Q1 2008 q-o-q, and a fall of 84 per cent y-o-y.
ERA Realty Network assistant vice-president Eugene Lim also believes that a buoyant HDB resale market could boost HDB upgrader sentiment, but he pointed out that the strength of the HDB resale market can be attributed to 'upgraders, downgraders and permanent residents'. On the last group, Mr Lim estimates that based on in-house data, permanent residents account for about 20 per cent of the buyers in the HDB resale market.
And attention is likely to continue to be diverted away from high-end products.
'The market is not short of buyers and many astute investors have been shopping around, looking to scoop up value buys,' added Mr Lim.
CBRE Research executive director Li Hiaw Ho noted that in the private property market, most of the transactions were mid and mass-market projects with the majority of transactions in the $750-$1,000 psf price bracket.
As such, Mr Li expects sales volume of new launches to rise to between 1,200-1,400 units in Q2 2008, compared to just 762 units in Q1 2008.
Property consultants have so far been careful to not use the 'F' word to describe home prices. Most believe prices have 'plateaued' or 'softened', but not 'fallen'.
Colliers International director (research and advisory) Tay Huey Ying even believes that home prices have, 'remained stubbornly resilient to the extent that they continue to post a y-o-y increase of 20.4 per cent'.
Ms Tay also added that for the first six months of the year, home prices rose by 4.2 per cent. '(Developer's) current pricing strategy can be described as competitive, that is either similar to current market prices or marginally lower than competitors,' she added.
Ms Tay believes that home prices will continue to resist 'downward pressure' and expects prices to hold steady or decline marginally by not more than 3 per cent in Q3 2008.
Saying that mass-market prices have generally not been 'chased up' or preyed upon by the 'speculative element', Ms Tay believes this sector could be the best performing for the rest of the year.
This however needs to be put in context.
Knight Frank's Mr Mak does point out that prime property prices have increased by 52.4 per cent over the last two years. 'On this basis, it is not surprising that this market segment will lead the slowdown in price growth,' he added.
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