The Straits Times | APRIL 02, 2013
Pace of growth slows in Q1, but private home prices still reach record high
The pace of growth of private and public home prices eased in the first quarter as January's cooling measures lowered the temperature of the red-hot market.
Even so, private home prices still reached a new overall record high in the first three months of the year, despite the gentler 0.5 per cent increase in prices.
The latest rise, reflected in Urban Redevelopment Authority flash estimates out yesterday, was well down from a 1.8 per cent jump in the final quarter of last year as prices across all non-landed segments grew more slowly.
Prices of apartments in the city centre inched up just 0.4 per cent from 0.7 per cent while prices of city fringe units were unchanged after having risen 0.9 per cent the quarter before.
Prices of non-landed homes in suburban areas edged up 1.7 per cent, well down from 3.8 per cent in the fourth quarter of last year.
Resale Housing Board flats also posted a fairly muted price growth, up just 1.2 per cent in the January to March period.
This is down from 2.5 per cent in the previous quarter and is the lowest quarter-on-quarter gain since the first quarter of last year.
Experts said the measures are starting to filter through the market, reining in prices even though demand drivers remain strong.
But recent policy changes such as singles being eligible for Housing Board Build-To-Order flats, as well as the bumper supply of new flats, have also dampened the demand for HDB resale flats, said PropNex Realty chief executive Mohamed Ismail.
The cap on the mortgage servicing ratio for HDB flat buyers on loans granted by banks, at 30 per cent of a borrower's gross monthly pay, has also dented the purchasing power of buyers. He expects resale prices to rise by between 4 per cent and 5 per cent this year.
According to Singapore Real Estate Exchange, the number of HDB resale transactions has also fallen from 4,635 in the final quarter of last year, to 3,028 in the first three months of this year.
The median cash over valuation - a cash component paid above a flat's valuation to sweeten the deal - fell from $34,000 to $33,000 in the same time period.
Median resale prices, however, have gone up slightly to $457,000 from $455,000.
Since the cooling measures were unveiled, private developers have been dangling carrots and incentives at launches to alleviate their sting. This helped spur robust sales at suburban launches like D'Nest in Pasir Ris and Urban Vista in Tanah Merah that helped sustain the moderate price rise in the segment, experts said.
With the market more attuned to the latest curbs, the coming months will be the real litmus test of market demand, as more new projects - particularly from the ramped up government land sales programme - are launched, said Ms Chia Siew Chuin, Colliers International's director of research and advisory services.
But the growing resistance to further price increases, coupled with the sizeable home supply that will come on stream in the next few years, will keep prices in check, she added. "The threat of rising interest rates should also contain the risk appetite of home buyers; hence, limiting their propensity to commit to prices extensively above the last done."
Experts noted the Government's resolve to tame the market, but felt it is likely to monitor the market for one or two more quarters before deciding on the need for more measures.
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