http://www.straitstimes.com/archive/...month-20130730

Resale home prices down 0.4% last month

Published on Jul 30, 2013

By Melissa Tan


RESALE home prices fell 0.4 per cent last month from the preceding month as more property buyers opted for new launches.

The rate of decline was slightly steeper than the 0.2 per cent dip from April to May, according to flash Singapore Residential Price Index (SRPI) figures released yesterday by the National University of Singapore.

The SRPI reflects the secondary market as it looks at transactions of completed properties.

Analysts said that the resale market could have weakened last month owing to lower sales activity during the June school holidays.

Some buyers may also have held back their purchases owing to the uncertainty over possible rising interest rates, said DTZ Singapore research head Lee Lay Keng.

Jones Lang LaSalle Singapore research director Ong Teck Hui put the overall decline down to "abundant opportunities for buyers in the primary market as well as owners of resale homes asking optimistic prices".

He noted that the number of homes sold on the secondary market in the second quarter of this year - 2,270 - is the lowest level since the last three months of 2008 when 1,220 homes were sold on the secondary market.

"Secondary market sales volume now accounts for only one-third of total transactions while during the early recovery phase of the market, they accounted for about two-thirds."

But Suntec Real Estate research head Colin Tan said the SRPI decline last month was "not deep enough to signal a future downward price trend" yet.

"The resale market has been weaker in terms of sales volume but prices are still holding up. I can only take this inconsistency to mean that the resale market is not unattractive, but investors see more play and potential in the primary market," Mr Tan said.

The drop in resale prices last month was largest in the central region, where they fell 1.5 per cent from May to last month. The figure excludes transactions of small homes that are 506 sq ft or less in size.

This was a reversal from the 1.5 per cent growth that city centre resale prices notched up from April to May.

The decline outweighed a modest price rise in non-central regions last month. Resale prices in non-central regions, excluding small homes, grew 0.5 per cent in June from the preceding month after falling a revised 1.5 per cent month-on-month in May.

For small homes, resale prices continued to decline last month, albeit at a slower pace than in May. They fell 1 per cent last month from the preceding month, after losing 1.3 per cent from April to May.

Analysts said that resale prices this month were likely to hover near last month's or weaken. "Going forward, sentiment and transaction volume could be weaker as the market starts to feel the impact of the stricter financing rules that were implemented in late June," Ms Lee said.

The rules, aimed at encouraging prudent borrowing, have made it harder for some property investors to buy new units since they specify that a borrower's total debt repayments should not exceed 60 per cent of gross monthly income.

Mr Tan said that liquidity still remains in the market so prices are unlikely to fall significantly.

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