Private home prices up 5.3% to reach new record in Q2

Private home prices in Singapore continued to trend up but at a slower pace.

Data released by the Urban Redevelopment Authority (URA) on Friday showed that overall prices rose by 5.3 per cent in the second quarter of 2010, compared to 5.6 per cent in the first three months of the year.

This was marginally higher than the initial forecast of a 5.2 per cent climb for Q2 reported earlier this month.

The increase pushed the residential property price index to an all-time high, surpassing the market peak of 181.4 points in Q2 of 1996.

Non-landed home prices in the city and prime districts rose 5.4 per cent in Q2. Those in the city fringe cost 4.6 per cent more. And suburban home prices increased 5.7 per cent.

Landed home prices rose at a slower rate of 6.2 per cent in Q2 compared with 8.3 per cent in Q1.

Projects like The Minton and Waterbank were among the star performers in the second quarter.

But new home sales slowed in late-May, with sentiment hit by the European debt crisis.

Even with prices at a new high, observers do not expect more government intervention, for now.

Liang Thow Ming, Credo Real Estate’s executive director (residential services), said: “The measures that they have put in over the last two years have already brought sub-sales, in terms of percentage point, to a not-normally-seen single-digit (number). In that sense, I think speculation has been managed.”

Sub-sales, a key gauge of speculative activity, fell to 7.7 per cent in Q2, down from 9.6 per cent in the first three months.

Looking ahead, market watchers expect home prices to continue to moderate. They said prices could rise by some 3 to 5 per cent in the third and fourth quarter. That will bring the full-year increase to between 16 and 21 per cent.

Investors may also be comforted by rentals of private residential properties rising 5.9 per cent in Q2, up from 4.7 per cent a quarter ago.

Nicholas Mak, real estate lecturer at Ngee Ann Polytechnic, said: “This could be due to the improving job market. We are starting to see more foreigners being attracted to our shores and this will likely to continue due to the better economic forecast.”

Higher rentals may also spill over into the HDB rental market.

With economic recovery, observers expect property market sentiment to remain positive.

All in, new home sales reached 8,413 units in the first half. Analysts said sales could hit 14,000 units for the whole year.

- CNA

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