Mar 29, 2011

The average prices of private apartments and condominiums have dropped slightly, a sign of the impact of the government’s cooling measures.

“The January 13 cooling measures are certainly working,” said Tan Tiong Cheng, Chairman of Knight Frank. “The lower loan-to-value (LTV) limit has affected investors with outstanding housing loans even if they have some financial capacity to purchase another residential property.”

The National University of Singapore’s (NUS) overall Singapore Residential Price Index (SRPI) plunged 0.4 percent month-on-month in February, a reversal from the 2.9 percent gain recorded in January.

The sub-index for the Central region, including districts 1 to 4 and 9 to 11, climbed one percent month-on-month in February, from a 3.1 percent gain in January, while the sub-index for the Non-Central region, where some suburban mass-market condos are located, dropped 1.5 percent in February, from a 2.8 percent gain in January.

Mr. Tan said that prices of private homes are likely to float at current levels “unless the government opens the immigration tap again and removes some of these very severe cooling measures, such as the seller's stamp duty (SSD) rates and 60 per cent LTV for those with existing housing loans”.

Prices of private homes in the Central region climbed at a quicker rate in the first two months of 2011, compared to the Non-Central region, marking the reversal of last year's price trends. As a result, the SRPI for the Central region has exceeded its pre-global financial crisis peak in November 2007, albeit by just 0.1 percent.

Overall, the February flash estimates reflect a year-on-year increase of 13.1 percent for the Non-Central region, 10.3 percent for the Central region and 11.9 percent for the overall index.

Ku Swee Yong, Chief Executive of International Property Advisor (IPA), said that prices of projects like Trillium and St Thomas Suites in the prime districts have increased, as buyers found that the completed projects exceeded their expectations.

“Clients whom we have brought for viewing for other projects like 8 Napier and Parkview Eclat have also been impressed by the quality of finishings,” added Mr. Ku.

Meanwhile, the average resale prices of leasehold condos in suburban areas rose 0.8 percent to S$665, while resale prices of freehold non-landed condos in prime districts 9 to11 climbed 0.4 percent quarter-on-quarter to S$1,525 psf.

High-end condos in prime districts have been seeing average resale prices of S$2,630 psf for two consecutive quarters, as the inflow of buyers to the segments continues, coupled with more supply in the pipeline.

“Real estate remains an asset class which people feel secure to park their finances with in this high inflation environment,” said Ms. Chua Chor Hoon, Head of DTZ South East Asia Research.

“Nevertheless we expect the pace of increase in prices to continue to slow down and plateau. There is more uncertainty this year, not just from the possibility of more cooling measures, but also from the recent regional events in the Middle East and Japan the full impact of which are still not known.”

Mr. Ku added that he does not expect the luxury condo market to outshine the suburban market in 2011, unless “we see an influx of more high net worth individuals into Singapore, both as tenants and buyers, and bankers receive their one- and two-year bonuses again.”

Info courtesy - PropertyGuru