Jan 27, 2007

Sharp rise in home prices confined to luxury condos

By Joyce Teo, Property Correspondent

NEW figures have confirmed what many suspected: that a sharp rise in private home prices last year was mainly confined to new luxury condo launches in several key hotspots.

That spells good news for private home buyers worried that all the bargains have gone, say property consultants.

But those hotspots still managed to propel overall private property prices up by 10.2 per cent last year, the biggest gain in eight years.

These hotspots include the Orchard area, Marina Bay and Sentosa Cove, where some eye-popping prices have been paid in recent months at luxury condominiums like Marina Bay Residences, St Regis Residences and The Coast.

Surging demand in these areas was fuelled by excitement over the integrated resorts to be built there. Some of the hotspots were also in districts 9, 10 and 11.

Demand for launches of plush new condos in these areas was so strong that prices surged 25.4 per cent last year.

In 2005, the rise was just 7per cent, with the overall price rise at 3.9 per cent.

Prices of completed homes in the hotspots posted less exciting but still robust growth of 9.9 per cent last year, figures released yesterday by the Urban Redevelopment Authority (URA) show.

'The rising participation of foreign buyers also helped to push up prices in the high-end segment, as they are generally more aggressive with their offer prices, thereby creating a bidding war at some of the properties,' said Knight Frank's Mr Nicholas Mak.

In the public housing segment, HDB resale prices rose 1 per cent in the fourth quarter, contributing to a rise of about 2 per cent last year.

The URA data showed that prices of private homes outside the central region - where mass market projects are usually built - also rose, albeit at a less spectacular pace. These properties posted 4.2 per cent growth last year, slightly higher than the 3 per cent growth for properties located in the central region, but outside of hotspots.

This is good news for potential home buyers such as marketing executive Agnes Tan. 'It's reassuring to hear that some properties have not risen a lot. It's good for first-time buyers like me,' she said.

Mr Colin Tan of Chesterton International said: 'All the new data just confirms that there is a gradual recovery in the property market and that there is no need for people to panic.'

Overall, it was a good year. The number of units on offer at new launches hit 11,069 - not far off the 11,520 new units launched in the record boom year of 1996 - while secondary sales levels reached a record high of 13,086 units. Sales of new homes hit 11,147 units, the highest seen since 1995.

The strength of the recovery was also reflected in a booming rental market, consultants said. Last year, rentals of private homes, led by non-landed ones, staged a strong recovery of 14.1 per cent - a level not seen since 1991 - from 3 per cent in 2005.

Indeed, Mr Tan said, rental growth could be as high as 50 per cent in some properties in districts 9, 10 and 11, which are seeing thinning supply as many ageing properties have been sold collectively and are headed for redevelopment.

Mr Ku Swee Yong, of Savills Singapore, said an inflow of expatriates and the arrival of new permanent residents and citizens would strongly boost demand.

'We are likely to see record rentals above $7 per sq ft a month sometime this year, and $8 to $9 psf a month next year,' he said.

Property consultants expect the residential market to remain strong this year, with increases of 10 to 30 per cent in the luxury segment.

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