by SUSAN TEO
This
article takes a peek at the some of the latest property price trend
in Singapore.
Most
indicators suggest that prices continue to head north.
The quarterly price index
compiled by the Urban Redevelopment Authority (URA), showed that
prices of private residential properties rose by 0.6 per cent in the
third quarter of 2012; whereas the price increase was only 0.4 per
cent in the second quarter of 2012.
A similar upward trend was
spotted in the National University of Singapore (NUS) Singapore
Residential Price Index (SRPI), developed by the Institution of Real
Estate Studies. Unlike the price index of URA, SRPI is a monthly
index that only looks at the price movements of private non-landed
residential properties. The URA price index, however, covers
different categories of private properties. Specifically, for private
non-landed residential properties, the URA index shows a price
increase of 0.5 per cent for two consecutive quarters (ie. 2Q2012 and
3Q2012). SRPI reflected a 0.6 per cent increase for September 2012.
Meanwhile for Singapore's
public housing landscape, the HDB Resale Price Index
showed a steady rise in HDB resale prices from the first quarter of
this year; with numbers standing at 0.6, 1.3 and 2 per cent for the
first, second and third quarters, respectively.
Based on a study
by a NUS don, Assoc Prof Tilak Abeysinghe,
Singapore's real estate prices have been
rising above the affordable level of a 4 per cent increase annually.
This number is arrived at based on the lifetime incomes of
Singaporeans.
“The actual
median price of both private and HDB units has risen by about 11 per
cent a year since that time [sic mid-2006], higher than the trend
price increase of about 8 per cent a year.” ("Inflated Housing
Prices Should Ease")
The continuous
increase in real estate prices, coupled with quantitative easing
policies in the US, Japan and Europe, have prompted the Governments
in Singapore, Malaysia and Hong Kong to implement cooling measures to
prevent property buyers from over-stretching themselves. For
Singapore, on 6 October, the Monetary Authority of Singapore
(Singapore's central bank) announced a lowering of the loan-to value
ratio (LTV), for loan tenure that exceeds 30 years or extends beyond
the age of 65, to 60 per cent for the first housing loan and 40 per
cent for subsequent loans. The maximum loan tenure has also been
capped at 35 years. This is the Singapore's Government sixth attempt
at bringing down property prices since September 2009. It remains to
be seen if this latest round of cooling measures will prove effective
in reining in prices.
On a more
positive note, according to Assoc Prof Tilak Abeysinghe:
“As housing
supply improves over the next few years and the immigrant population
declines, we can expect house price inflation to fall to an
affordable trend rate like 4 per cent” ("Inflated Housing
Prices Should Ease")
On a similar
note, URA's latest figures for October revealed that sales volume for
private residences have dipped. This is believed to be partly a
result of the Government's newest cooling measures. Sales figures -
excluding executive condominiums - showed a 26 per cent
month-on-month decline. In absolute terms, 1,948 units were sold in
October compared to 2,621 in the previous month.
Looking ahead,
more property launches are expected before the close of the year, but
analysts are expecting sales to continue to moderate because of the
festive mood, tighter loan regulations and as buyers take stock of
development in the property market.
References
1. Assoc
Prof Tilak Abeysinghe, "Inflated Housing Prices Should Ease",
The Straits Times 4 Oct 2012 , Print
2. Teo,
Esther, “New Private Home Sales Cool Rapidly in October”, The
Straits Times 16 Nov 2012 , Print
3. HDB
Resale Price Index, Web
<http://www.hdb.gov.sg/fi10/fi10321p.nsf/w/BuyResaleFlatResaleIndex?OpenDocument>
4. NUS
Singapore Residential Price Index (SRPI), Web
<http://www.ires.nus.edu.sg/webapp/srpi/SRPI_Main.aspx>
5. URA,
“Release of 3rd Quarter 2012 Real Estate Statistics”, 29 Oct
2012, Web
<http://www.ura.gov.sg/pr/text/2012/pr12-120.html>
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