Tuesday, January 4, 2011

High-end rally seen as city centre homes hit peak

NEW data on property sales tells a mixed tale - city centre apartments have made a comeback and values are now likely at record levels but private home prices overall are moderating slightly.

Cooling measures introduced in August last year seem to have taken a little of the heat out of the market with prices for non-landed homes up 2.7 per cent in the three months to Dec 31 - slightly down on the 2.9 per cent increase in the third quarter.

Signs of moderation were even starker among private suburban apartments, with prices up just 1.6 per cent in the fourth quarter, down from the 2.2 per cent increase seen in the third.

But even a slower fourth quarter could not take the shine off what has been a bumper year for private homes, no matter where you live - or bought.

Prices of apartments in the city fringe jumped 17.5 per cent last year while they were up 14.5 per cent in suburban spots and 14.3 per cent in the city centre, according to flash estimates from the Urban Redevelopment Authority (URA) yesterday.

All in all, prices for private homes - landed and non-landed - surged 17.6 per cent last year.

The city centre, which has much of Singapore's high-end property, was clearly the laggard last year but the URA numbers show that a rally in this zone has finally kicked in.

Prices of private apartments in the city centre increased 2.3 per cent in the last quarter and are now 2.1 per cent higher than their previous peak, in the first quarter of 2008.

Experts tip that these prices could rise a further 8 to 15 per cent this year given the increasing number of foreigners buying here, healthy economic growth and low interest rates.

Mr Png Poh Soon, head of research and consultancy at Knight Frank, said that foreigners made up 24.7 per cent of buyers last year - up on the 21.8 per cent in 2009. 'The tightened regulations in Hong Kong and aggressive anti-speculation rules in China will inevitably direct some investors from these buoyant markets to Singapore,' he added.

The trend was already evident in the last quarter when Chinese buyers edged out Malaysians as the largest proportion of foreign transactions for the first time, Mr Png said.

Ms Tay Huey Ying, director of research and consultancy at Colliers International, expects city centre prices to jump by between 10 and 12 per cent this year while the overall market should see values rise by 10 per cent.

Experts said that buying momentum for high-end homes is likely to continue, with prime projects such as Ardmore 3 and Le Nouvel Ardmore on the way after recent successful launches such as Robinson Suites, Suites at Orchard and The Glyndebourne.

Ms Tay added that slowing price rises in suburban homes - up just 1.6 per cent in the fourth quarter - should keep further cooling measures at bay in the short term.

Mr Ong Kah Seng, senior manager of Asia-Pacific research at Cushman & Wakefield, added that modest price rises in suburban condos despite buoyant new sales in November and last month showed that the Government's measures have stabilised prices.

But he believes the cooling steps will have less impact on the top end.

'Prime residential properties, which have been the laggard in 2008 to 2010, are expected to shine in 2011, while those in (suburban areas) may be relatively restrained... due to the large forthcoming supply which intensifies competition among developers and provides more choices for home buyers,' he added.

The URA estimates capture mainly transactions in October and November as the cooling measures intended to quell speculation - including tighter lending rules for buyers with second mortgages - started gaining traction. The data will be updated in four weeks.

Separately, Far East Organization said yesterday that 253 out of 299 Soho-style - small office or home office - apartments released at 338-unit The Tennery at Bukit Panjang have sold for $950 to $1,350 per sq ft.

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