Central region resists overall dip for now, but luxury market also expected to stay flat
By KALPANA RASHIWALA from the Business Times, 29th March 2011
Prices of completed private apartments and condos have slipped slightly, overall, as the government's cooling measures made themselves felt. But those in the most posh part of town are still holding their own.
Latest flash estimates for February from the National University of Singapore show a weaker month-on-month performance in price indices compared to January.
'The Jan 13 cooling measures are certainly working,' said Knight Frank chairman Tan Tiong Cheng. 'The lower loan-to- value limit has affected investors with outstanding housing loans even if they have some financial capacity to purchase another residential property.'
NUS's overall Singapore Residential Price Index (SRPI) dipped 0.4 per cent month on month in February, a reversal of a gain of 2.9 per cent posted in January.
The sub-index for the Central region - home to Singapore's choicest residential districts (1-4 and 9-11) - rose one per cent month on month in February, a slower rise than the 3.1 per cent gain recorded in January.
The sub-index for the Non-Central region (where suburban mass-market condos are located) declined 1.5 per cent in February over the preceding month, in contrast with a 2.8 per cent appreciation in January.
Mr Tan predicts that private home prices in Singapore are likely to drift 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 rates and 60 per cent LTV for those with existing housing loans'.
Meanwhile, prices in the Central region have risen at a faster clip in the first two months of this year since end-2010 than in the Non-Central region. This marks a reversal of last year's pattern.
As a result, the SRPI for the Central region has finally surpassed its pre-global financial crisis peak of November 2007, albeit by just 0.1 per cent.
NUS's indices are produced by the university's Institute of Real Estate Studies and cover only completed non-landed private homes. The February 2011 flash estimate for the Central region index is up 4.1 per cent from the end of last year. This is a bigger gain than the 1.3 per cent year-to-date appreciation in the index for the Non-Central region.
The February Non-Central region index is up 18.8 per cent from its pre-crisis peak in January 2008.
The overall SRPI has appreciated 2.5 per cent year to date and is 11.5 per cent higher than its November 2007 peak.
February flash estimates reflect year-on-year increases of 10.3 per cent for the Central region, 13.1 per cent for the Non-Central region and 11.9 per cent for the overall index.
International Property Advisor (IPA) chief executive Ku Swee Yong said that prices of projects such as St Thomas Suites and Trillium in the prime districts, which were completed towards the end of last year, have posted price gains as buyers viewing the finished projects have found their quality better than expected.
'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,' he added.
Despite the NUS SRPI for the Central region outperforming that for the Non-Central region in February, Mr Ku is doubtful that this trend will prevail for the whole of this year.
'Unfortunately, wealth does not trickle from the bottom to the top,' he said. 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', he added.
The luxury market is likely to remain flat this year in terms of both prices and transactions, Mr Ku predicts.
Last year, out of the 16,292 private homes developers sold, only about 100 were above $3,000 per square foot.
'Foreigners are still scouting for buys but are not coming back to the high-end market the way they were in 2007,' he added.
Agreeing, Knight Frank's Mr Tan said: 'The foreign contingent is not back in full force. And there's still a good selection of units in prime district projects available from developers, which will put pressure on prices. For these reasons, I don't see a need for further cooling measures.
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