Residential Property Prices in Singapore
Report dated: 3 January 2011
Residential property prices in Singapore continued to rise in the fourth quarter, capping off a full year of strong growth for 2010.
Based on initial flash estimates, prices of HDB resale flats for the full year rose almost 14 percent while private home prices increased by 17.6 percent.
But signs are emerging that the market is stabilising, as the rate of growth slowed in the fourth quarter.
According to the Urban Redevelopment Authority (URA), private residential property prices rose 2.7 percent between October and December. The increase is lower than the 2.9 percent rise recorded in the previous quarter.
Over in the public housing market, HDB resale prices rose 2.4 percent in the fourth quarter, slower than the 4 percent pace in the previous quarter.
Market watchers said the slowdown in the pace of increase points to a stabilising market and expect prices to level out in the coming months.
They said property-cooling measures implemented on 30 August appear to have taken some heat off the HDB resale market.
Among the measures is a ruling which disallows private property owners to own an HDB flat at the same time. This has turned many away from the market.
Investors looking to profit from the resale market are also thinking twice now, said Dennis Wee Group director, Chris Koh.
"There has always been a group of people who buy and sell flats very regularly; every 3 to 5 years they change the address of their HDB flat. This group of people are also affected by the new measures, because the financing limit is lesser. They have to cough up 10% cash, for example, instead of 5%," he said.
Resale volume also fell in the fourth quarter - down by 21% to about 6,500 transactions - mainly because of the cooling measures and the traditional year-end slowdown.
SLP International's executive director of research and consultancy, Nicholas Mak, expects transaction volume to pick up in the first quarter of this year.
"There will be a slight increase, but I don't think we will see a strong spike of above 10,000 units like what we've seen during the height of the HDB resale market boom," he said.
Meanwhile, the cash that home buyers have to pay upfront - also known as cash-over-valuation - stood at S$23,000, a drop of S$7,000 from the third quarter.
Property firms said they are also seeing sellers asking for lower upfront cash due to the cooling measures.
But it will be a few more months before this downward trend visibly impacts housing prices, as valuation is partly based on past transactions.
Mark Teo, senior group division director at Hersing Corporation, said: "I believe the COV prices for the first quarter of this year are going to continue to go down further....probably, by another S$5,000 or S$,10,000. If COV prices come down further, I think in the future, in the next one or two quarters, the valuation of flats from HDB will come down further."
And with the housing board promising to ramp up supply of new flats to meet demand, home buyers are no longer rushing into the market.
Donald Han, vice-chairman of Cushman & Wakefield, said: "Buyers are taking it in their stride, not paying the kind of level that sellers are looking for in terms of their asking prices and extremely high cash-over-valuation. And all that has a moderation effect on the property market."
HDB plans to release 11,000 new flats in the first half of this year in towns such as Bukit Panjang, Sengkang and Yishun.
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Singapore Residential Price Index
