Most indicators suggest that prices continue to head north. The quarterly price index compiled by the Urban Redevelopment Authority (URA), showed that prices of private residential properties rose by 0.6 per cent in the third quarter of 2012; whereas the price increase was only 0.4 per cent in the second quarter of 2012.
A similar upward trend was spotted in the National University of Singapore (NUS) Singapore Residential Price Index (SRPI), developed by the Institution of Real Estate Studies. Unlike the price index of URA, SRPI is a monthly index that only looks at the price movements of private non-landed residential properties. The URA price index, however, covers different categories of properties. Specifically, for private non-landed residential properties, the URA index shows a price increase of 0.5 per cent for two consecutive quarters (ie. 2Q2012 and 3Q2012). SRPI reflected a 0.6 per cent increase for September 2012. Get the facts about Meyer Mansion Guocoland
Meanwhile for Singapore’s public housing landscape, the HDB Resale Price Index showed a steady rise in HDB resale prices from the first quarter of this year; with numbers standing at 0.6, 1.3 and 2 per cent for the first, second and third quarters, respectively
Based on a study by a NUS don, Assoc Prof Tilak Abeysinghe, Singapore’s real estate prices have been rising above the affordable level of a 4 per cent increase annually. This number is arrived at based on the lifetime incomes of Singaporeans.
“The actual median price of both private and HDB units has risen by about 11 per cent a year since that time [sic mid-2006], higher than the trend price increase of about 8 per cent a year.” (“Inflated Housing Prices Should Ease”)
The continuous increase in real estate prices, coupled with quantitative easing policies in the US, Japan and Europe, have prompted the Governments in Singapore, Malaysia and Hong Kong to implement cooling measures to prevent property buyers from over-stretching themselves. For Singapore, on 6 October, the Monetary Authority of Singapore (Singapore’s central bank) announced a lowering of the loan-to value ratio (LTV), for loan tenure that exceeds 30 years or extends beyond the age of 65, to 60 per cent for the first housing loan and 40 per cent for subsequent loans. The maximum loan tenure has also been capped at 35 years. This is the Singapore’s Government sixth attempt at bringing down property prices since September 2009. It remains to be seen if this latest round of cooling measures will prove effective in reining in prices.
On a more positive note, according to Assoc Prof Tilak Abeysinghe:
“As housing supply improves over the next few years and the immigrant population declines, we can expect house price inflation to fall to an affordable trend rate like 4 per cent.” (“Inflated Housing Prices Should Ease”)
On a similar note, URA’s latest figures for October revealed that sales volume for private residences have dipped. This is believed to be partly a result of the Government’s newest cooling measures. Sales figures – excluding executive condominiums – showed a 26 per cent month-on-month decline. In absolute terms, 1,948 units were sold in October compared to 2,621 in the previous month (“New Private Home Sales Cool Rapidly in October”).
Looking ahead, more property launches are expected before the close of the year, but analysts are expecting sales to continue to moderate because of the festive mood, tighter loan regulations and as buyers take stock of development in the property market.