IN a sign that the property cooling measures are taking effect, Urban Redevelopment Authority's overall private residential price index posted a 2.1 per cent quarter-on-quarter increase in Q1, compared with a q-on-q increase of 2.7 per cent in Q4 last year, latest government flash estimates show.
'The rate of increase has moderated for six consecutive quarters since Q4 2009,' URA said in its release.
Similarly, the Housing & Development Board's resale flat price index registered a 1.6 per cent q-on-q gain in the first quarter, the slowest increase in seven quarters.
URA's sub-index for prices of non-landed private homes posted a q-on-q gain in Q1 2011 of 0.9 per cent for Core Central Region (which includes the prime districts 9, 10 and 11, as well as the financial district and Sentosa Cove) - a smaller hike than the 2.2 per cent q-on-q rise for Q4 2010.
However, the index for Rest of Central Region (which covers places like Bukit Merah, Queenstown, Geylang, Toa Payoh and Katong) increased 2.2 per cent in Q1 over the preceding quarter - a bigger gain than the 1.9 per cent q-on-q gain in Q4 2010. The index for Outside Central Region (covering suburban mass-market locations like Woodlands, Clementi, Jurong, Hougang, Tampines and Bedok) posted a 3.1 per cent q-on-q rise in the first three months of 2011, after rising 2.1 per cent q-on-q in Q4 2010.
Credo Real Estate executive director Ong Teck Hui said: 'The cooling measures did not affect genuine home buyers as much as they did investors and speculators. And demand for OCR is sustained by genuine buyers.' Some market watchers suggest there may be some diversion of investment demand from high-end property to lower-priced segments as the cooling measures stretched budgets.
However, some analysts point out that the rate of q-on-q price increases for OCR had moderated in Q3 and Q4 last year before rising again in Q1. And the Q1 flash estimate for the region reflected a year-on-year appreciation of 13.6 per cent; this figure has been easing since peaking at 36.1 per cent in Q2 last year.
CB Richard Ellis executive director Li Hiaw Ho attributes the 3.1 per cent rise in the Q1 flash estimate for OCR to projects like Waterfront Isle along Bedok Reservoir, The Lakefront Residences near Jurong Lake, and The Tennery in Bukit Panjang which registered strong take-up at median prices (in the first two months of this year) of about $990 psf, $1,050 psf and $1,200 psf respectively. 'These projects attracted home buyers mainly because of their proximity to an MRT station,' Mr Li said.
He attributes the 2.2 per cent appreciation in the RCR's price index to Spottiswoode 18 and The Cape - both transacting at a median price of about $2,000 psf - as well as projects with small-format units like Palmera East ($1,225 psf).
URA said that as at end-2010, there were about 33,000 yet-to-be-sold private homes in uncompleted projects with planning approval - of which 40 per cent is in OCR. In addition, there were 1,500 executive condominium units (a hybrid of public and private housing) that were still unsold.
The above supply figures do not take into account new sites that were recently sold (which can generate about 8,100 units) or which will be made available for development through the confirmed list of the Government Land Sales (GLS) Programme in H1 2011 (which can generate about 5,360 units). Additional supply may also come from private land sources, such as en bloc sales.
Nomura Singapore analyst Sai Min Chow said: 'The combination of more completions (tempering rental expectation), government measures that cap home buying capability, and supply that could be launched from sites (both GLS and en-bloc) sold will continue to weigh on home prices. We expect this to translate into a flattish outlook for mass prices and up to 8 per cent correction for luxury prices this year.
Colliers International, however, predicts that overall private home prices will rise by up to 8 per cent for the whole of this year.
Knight Frank chairman Tan Tiong Cheng said: 'Certainly the cooling measures are working. If developers' sales continue to come off, prices may ease. But any price drop may be mitigated in a scenario of rising construction costs amid the increase in oil prices and expected reconstruction efforts in Japan.
'Interest rates are likely to remain low for the foreseeable future and the fact that HDB resale prices are still strong will continue to create a push for upgrading to the private market.'
HDB yesterday said it will launch about 17,800 build-to-order flats in the first nine months of this year - close to the 17,700 new flats offered for the whole of 2010.
ERA Realty Network and Propnex said cash-over-valuation amounts have stabilised at about $20,000 in Q1 based on transactions handled by their firms.
ERA's key executive officer Eugene Lim said: 'We estimate the total HDB resale volume for Q1 to be just below 7,000 deals.' The figure for Q4 was 6,454.
For the whole of 2011, he predicts HDB's resale price index to increase about 6-9 per cent with total resale applications of about 28,000-30,000. The index rose 14.1 per cent last year, when there were 32,257 resale applications.
PropNex CEO Mohamed Ismail predicts a 6-8 per cent hike in HDB's resale price index this year.