Published May 30, 2006

New property curbs unlikely despite top-end price surge
Property players say increase is modest, healthy and sustainable


JUST over 10 years to the day when the government slammed the brakes on the residential property market, industry players don't see a fresh round of curbs any time soon, despite the surge in prices and activity at the top end of the market.

'The price increase we have experienced thus far has been rather modest and market signals indicate that it is a healthy, sustainable growth,' says City Developments Limited (CDL) group general manager Chia Ngiang Hong. 'Even in the high-end segment, overwhelming demand is seen only in a handful of projects that are aimed at niche markets and are iconic and exceptional.'

Knight Frank's director of consultancy and research Nicholas Mak says there is 'little sign of speculation and overheating.' And anyway, 'having some speculation in the market is not a bad thing'.

In May 1996, the government stunned the market by announcing a package of measures to check sharp increases in prices and flush out speculators, including taxing gains from the sale of property within three years of purchase.

These measures have since been rolled back, and industry players do not see fresh curbs looming because gains in the overall market have been modest at best, with consultants looking at growth of about 5 per cent in the private mass-market segment this year.

Chesterton International's head of research Colin Tan says: 'There is a decoupling of the market, with the premium market moving on its own.' And because ordinary Singaporeans are not a buyer of the super-luxury residential projects, he believes the government may not be worried. The current situation is different from 1996 when 'you had the situation of young couples being afraid that property prices were running away'.

And as DTZ Debenham Tie Leung executive director Ong Choon Fah points out: 'Mass market residential properties are affordable now - incomes have increased but prices have not increased at the same rate. If the market is supported by fundamentals, there is no reason for intervention.'

By late-1998 after the Asian financial crisis, average prices had tumbled about 45 per cent from their mid-1996 level. And even with the recent recovery, prices on average are 34 per cent below those in mid 1996 - a slump that led to some owners being saddled with loans that exceeded the value of their properties.

Industry players believe lessons have been learned from those days. 'Developers have paced their launches so as not to flood the market, mindful of the appetite of different-tier buyers,' says CDL's Mr Chia.

For the government's part, he says the modification of the land sale programme 'through the implementation of the reserve list has helped to manage supply'. And at the same time, 'buyers have become very discerning and selective'.

At the top end of the market, projects like The Boulevard Residence at Cuscaden Walk, near the Orchard Road shopping belt, have fetched around $2,300 per square foot, and expectations are high that choice units at St Regis Residences, between Tanglin and Cuscaden roads, will fetch $2,600 per square foot or more - higher than similar developments brought a decade ago.

But DTZ's Ms Ong says the latest high end properties represent a new class of super-luxury housing - a trend seen across Asia - so the situation now and 10 years ago is not comparable.

'Singapore is moving up the scale towards being a big global city and certain residential property projects are attracting not just regional buyers but international ones from the US and the UK,' she points out.

CDL's Mr Chia says the local market has lagged neighbouring countries, and that prices are modest compared with gateway cities like Tokyo, Hong Kong, New York and London.