Feb 8, 2007

Home prices expected to keep rising

By Fiona Chan

PROPERTY analysts believe the residential market will continue to trend upwards this year, barring any unexpected external shocks.

Home prices should keep rising, over the next 12 months at least, said four industry watchers at a panel discussion on the property market held by the Singapore Press Club yesterday.

Last year, private home prices rose 10.2 per cent across the board, the highest rate in eight years.

Mr Ku Swee Yong, director for marketing and business development at Savills Singapore, believes they will rise further this year.

Recent changes in the economic landscape in Singapore are attracting more home buyers, he said.

Mr Ku pointed to the upcoming integrated resortsas a major pull factor. They have generated interest in new living options in the downtown Marina Bay area as well as in the luxury enclave Sentosa Cove, causing home prices in both districts to soar in recent months.

As for concerns that the upswing in the property market is limited to the high-end segment, another analyst believes the lower-end tiers are likely to move this year.

With both the economy and the stock market turning in strong performances recently, the wealth effect is starting to filter down, said Mr Tan Tiong Cheng, managing director of Knight Frank.

'General affordability has improved,' he said, pointing out that salaries in general have risen in the last few years while property prices have remained flat.

Another hot topic raised at the discussion was the recent buzz about rising speculation in coveted luxury developments.

Mr Winston Liew, senior analyst at OCBC Investment Research, cautioned that a lot of the current hype about the property market has been partly due to speculation.

About 20 per cent of new home sales in recent months have been sub-sales - the quick resale of a new property - which are a proxy of speculative activity, he noted.

But Mr Liew warned that buyers should not be sucked into the speculative fever, especially if they are doing so on borrowed money.