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Published October 28, 2006

Private home price gains fastest in 6 yrs

Non-landed properties see highest rise of 3.2%, followed by detached houses at 1.4%


(SINGAPORE) Prices for private housing are rising at their fastest in six years, latest figures show.

According to statistics from the Urban Redevelopment Authority, prices of private residential properties were 2.7 per cent higher in the third quarter of this year than in the previous quarter, the highest quarter-on-quarter increase in six years.

Non-landed properties registered the highest increase of 3.2 per cent, while prices of detached, semi-detached and terrace houses rose 1.4 per cent, 0.9 per cent and 1.1 per cent respectively.

Rents also rose significantly, up 5 per cent in Q3 compared to 2.1 per cent in the previous quarter.

But the latest huge rises are confined to the private sector. For public housing, the Housing and Development Board Resale Price Index dipped slightly by 0.2 of a percentage point, compared to the previous quarter, although resale prices are now some 1.4 per cent up on the same period last year.

As at the end of Q3, there were 25,259 uncompleted units with prerequisite conditions for sale. Of these 15,119 units had been sold. The remaining 10,140 units which had yet to be sold comprised 3,314 units which had been launched for sale and 6,826 units which had not. There were also 849 completed but unsold units.

There was a small drop in the number of uncompleted units launched and sold in Q3 by developers. For Q2 and Q3, uncompleted units launched by developers came to 3,005 and 2,257 respectively.

The number sold directly by developers for Q2 and Q3 was also down from 2,369 to 2,133 respectively.

Units sold in the secondary market dipped by about 7 per cent to 2,901 but the cumulative number of 8,352 units for the first three quarters of 2006 already exceeds the total of 7,582 units for the whole of last year.

Sales in the secondary market are largely attributed to the number of collective sales although the prices are not reflected in the price index.

Tay Huey Ying, Colliers International director for research and consultancy, says that the latest quarterly rise in private housing prices was driven by the continued surge at the top end of the market, landed and non-landed. She says that the growth in the average price of luxury non-landed homes accelerated this year to 21 per cent in the first nine months of the year. 'It far exceeds the 7 per cent growth chalked up for the whole of last year,' she points out.

According to Colliers' data, average prices of luxury apartments are now $1,760 psf, just a shade off 1997's peak of $1,778 psf. High prices for landed property, especially at Sentosa Cove, also helped to push up the price index.

Ms Tay notes that the highest price there was $1,039 psf, 75 per cent higher than the average land price of freehold good class bungalows on the mainland.

Ku Swee Yong, director of marketing and business development at Savills Singapore, believes that transactions of city-fringe developments have helped boost property prices. But he adds: 'It is too soon to say if this indicates a broad-based recovery in the property market.'

Subsales are sometimes considered an indicator of investor confidence, and Mr Ku notes that Icon in Tanjong Pagar saw 23 subsale transactions in the third quarter. In the same quarter, The Sail @ Marina Bay saw 46 subsale transactions. Icon was launched in 2003 at about $650 psf but prices have since increased to about $900, with one unit on a high floor recently transacting at $1,200 psf.

Even in Tiong Bahru, Twin Regency, which is fully sold, saw 16 subsale transactions.

In the luxury segment, URA data reveals that St Regis Residences is still 50 per cent unsold, with one subsale transacted in Q3. The 73-unit Scotts Highpark has sold 13 of the 37 units launched.

'When the price gradient for properties in a district gets too steep, people will start looking further down the road,' says Mr Ku, showing that buyers are still price sensitive.

Indeed, Eugene Lim, assistant vice-president of estate agency ERA Singapore, says that he has seen more transactions in the suburban secondary market although prices have remained flat.

But there are indications that the mass market is strengthening, this following the good response for The Centris in Jurong, which is more than 80 per cent sold at $500-550 psf. 'We estimate developers are preparing to launch over 1,000 units of mass market projects in the coming months,' he adds.

URA's Rental Index has also increased significantly across the board. Apart from the 5 per cent increase in residential rents, office rents are up even higher this quarter at 7 per cent compared to the previous 6.6 per cent in Q2. Shop rents have dropped slightly from 1.4 per cent in Q2 to 1.2 per cent but all industrial rents are up 0.3 per cent from 0.1 per cent in Q2.

Moray Armstrong, executive director of offices services at CB Richard Ellis, points out that latest figures reveal that office vacancy fell from 12.3 per cent in Q2 to 10.5 per cent in Q3, 'a level not seen since Q1 2001'.

And the office sector looks set for a broad-based recovery, too. Mr Armstrong says: 'With Grade A space close to full occupancy, we expect the Grade B and Fringe Office micro-markets to benefit from overspill of the prime location.' Office rents for Central Area rose 7.2 per cent from 7.1 per cent in Q2. Rents for Fringe Area offices also rose 5.8 per cent, up from 3.5 per cent in Q2.