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Private home prices up 31% last year

But fourth-quarter figures show signs of slower growth; HDB resale prices up 17.4%

 

HOME hunters can ring in the new year with some cheer – the roaring property market is finally showing signs of slowing.

Prices of all categories of homes grew at a lower rate at the end of last year, after months of climbing at a breakneck pace.

Growth braked the most at the highest end of the market, allowing cheaper suburban homes to lead the price rises for the first time in years.

Even with the slowdown, private home prices still beat most forecasts by shooting up 31 per cent for the whole year – triple that of 2006 and the most since 1999.

HDB resale prices climbed 17.4 per cent – the highest rise in a decade – up from only 2 per cent the year before.

‘It’s a spectacular rise,’ declared Mr Nicholas Mak, director of research and consultancy at Knight Frank.

Mr Li Hiaw Ho of property consultancy CB Richard Ellis (CBRE) estimated that developers sold a record 15,000 new homes last year, up from 11,147 in 2006.

Most property experts are unfazed by the smaller price rises in the last quarter, saying that the deceleration was ‘expected’ and ‘healthier’.

Growth in home prices slowed across the board from October to December, according to estimates released by the Government yesterday. The official figures will be out on Jan 25.

Overall, private home prices rose 6.6 per cent in the period, less than the 8.3 per cent in the previous three months.

At the top end, prices of homes in central areas such as Orchard, Cairnhill and Tanglin rose 7 per cent, down from 8.3 per cent growth in the July to September period.

City-fringe homes, such as in Marine Parade and Bishan, rose in price by 7.3 per cent, from 7.9 per cent earlier.

Suburban properties were the quarter’s star, thanks to new projects launched at benchmark prices, said Mr Li.

Homes in areas such as Bukit Batok and Choa Chu Kang saw prices rise 7.5 per cent, just below the 7.9 per cent previously.

As for HDB resale flats, prices grew 5.6 per cent, a tad lower than the 6.6 per cent in the previous three months.

The lower price rises ‘may indicate that buyers are turning cautious in view of events in the fourth quarter,’ said Mr Eugene Lim, assistant vice-president of property firm ERA Singapore.

These include the global fallout from the United States sub-prime mortgage crisis and concerns over a possible US recession, which could have hurt investor confidence.

Yesterday, Minister for National Development Mah Bow Tan told reporters that while such ‘external factors’ are beyond the Government’s control, it will ‘keep a very close eye’ on the property market.

‘It’s really up to us…to tweak those policy levers’ to keep property prices stable or let them move in tandem with economic fundamentals, he said.

Already, the Government’s scrapping of the deferred payment plan in October may have cooled sentiment, especially for luxury homes.

But despite these pressures on demand, developers are not cutting prices, said Mr Lim. ‘We are seeing a situation where prices are not coming down, but neither are they going up.’

For this year, some buyers expect a market correction, as more homes come on stream.

But experts said home demand is set to stay strong this year on the back of a growing economy and population.

CBRE’s Mr Li expects luxury home prices to stay at current levels and cheaper homes to grow in price by 10 to 15 per cent. More bullishly, Mr Ku Swee Yong of Savills Singapore predicts suburban home prices will rise by 30 to 50 per cent.

 

Source: The Straits Times 3 Jan 08

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