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Published January 15, 2007

URA to release detailed property price data soon

Different housing market segments to have own indices


(SINGAPORE) The Urban Redevelopment Authority (URA) will soon release more comprehensive data to the public on private residential property prices. The change could come as early as end-January, when it is due to issue official market statistics for Q4 2006.

A spokesman for URA told The Business Times: 'URA intends to provide more detailed information about private residential properties when we release our quarterly data in end January. This includes making public different price indices for different market segments of private residential property.'

The latest property price movements, as reflected in URA's flash estimates for its Q4 2006 private property price index (PPI) reveal that private residential property prices rose 10 per cent year-on-year (y-o-y).

However, most property analysts BT spoke to believe the high-end market has climbed at least 30 per cent (y-o-y) while on the other extreme, some segments of the market have moved by a modest 3 per cent (y-o-y).

URA's move to release more comprehensive data on the private residential property market is largely seen as a response to the increasingly divergent prices in the various segments.

The PPI is essentially a transaction-based index. Properties are sub-divided into different segments to form sub-indices which are then used to calculate the PPI. URA uses the moving average method to compute the weights assigned to the various sub-indices. The weights, updated quarterly, are based on the moving average mix of transactions over the last 12 quarters.

The price index, modified in March 2000, is the official take on private property market trends. But the recent divergence in price movements for different segments of the residential market is leading some to question its relevance.

Lum Sau Kim of the Department of Real Estate, School of Design and Environment, National University of Singapore, points out that if for a given quarter there were no transactions in a particular market segment, 'the PPI cannot inform us about the price level for that segment in the stated quarter or the changes in the price level compared to earlier periods'.

Dr Lum also highlighted one shortcoming of the 12-quarter moving average method. 'Even though the composition of transactions a couple of years ago may have little resemblance to the mix of properties transacted this quarter, those transactions still exert an impact on the index for the current period.'

URA's decision to release more data is however likely to be welcome news for market players.

Chesterton International head of research and consultancy Colin Tan feels there should be two indices - one for the mainstream mass-market and another for the top-end. 'The percentage rise presented (in the PPI) grossly understates the rise in the top segment of the market while exaggerating the increase in the mainstream mass market.'

As such, there is currently no meaningful relationship between price increases in the mainstream market and the high-end market within the PPI.Savills Singapore director (marketing & business development) Ku Swee Yong says: 'The reason why the index did not cross 10 per cent (for the whole of 2006) is due to the flat prices in the secondary market.'

Colliers International director (research and consultancy) Tay Huey Ying cautions: 'Interpreting the movement of the all-residential PPI as representative of specific segments or types of properties in specific locations can be misleading.

'As the all-residential PPI is a composite index, users should not rely on the index to make purchase or sale decisions without gaining a deeper understanding into the transactions from which the index was derived.'