URA expects Q3 private home prices to fall 1.8%
By Wong Siew Ying, Channel NewsAsia | Posted: 02 October 2008 1401 hrs

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SINGAPORE: Private home prices in Singapore fell by 1.8 per cent in the third quarter, according to flash estimates released on Thursday by the Urban Redevelopment Authority.

This is the first time the index of private residential properties has dipped in four years to 174.3 points in the third quarter, compared to second quarter's price index of 177.5 points, which was a 0.2 per cent increase over the previous quarter.

The cost of high-end properties in prime districts continues to taper, with prices falling by 2 per cent quarter-on-quarter, but those in the mass market segment grew marginally by 0.1 per cent.

Some industry watchers say the figure is better than expected, given deflated investor sentiments amid concerns of a brewing global economic storm.

They expect a gradual sell-down of properties if prices trend down further and the economy takes a turn for the worse.

Director of Savillis, Ku Swee Yong, said: "There has been an increased urgency to sell. The good thing that is preventing that from happening on a very widespread scale is interest rates are still pretty low. We are worried about the potential job losses, but that has yet to happen in a big way."

Analysts project prices of private residential properties will slide by 2 per cent over the next 6 months. But they add that this is unlikely to trigger substantial sales as buyers will bide their time until prices bottom out.

Director of Consultancy & Research at Knight Frank, Nicholas Mak, said: "Developers will try to resist cutting prices, they may give different sorts of soft discounts. For example, they may give furniture vouchers, they may give renovation vouchers or other methods in a way to try to encourage the growth."

With the financial crisis unfolding in the US, market players say some investors are considering parking their funds in the property market instead of investing in financial instruments.

One analyst said that the number of enquires on properties has gone up since the collapse of investment bank Lehman Brothers.

In contrast, prices of resale public housing flats rose 4.2 per cent in the third quarter.

This is slightly lower than the 4.5 per cent increase registered in the second quarter, but property watchers say demand in this segment will continue to be robust.

Real estate agency Propnex says the Resale Price Index (RPI) of 137.4 is now the highest mark reached by the RPI since the last quarter of 1996, which saw an RPI of 136.9.

Property agents believe demand for resale flats will continue to be robust despite the Housing and Development Board's plan to offer more new units in the coming months, and the overall price outlook for the year could see a growth of between 15 and 17 per cent.

- CNA/yt