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Property market shows signs of cooling

AFTER months of relentless price rises, the property market finally took a breather at the end of last year.

Almost all sectors – including private and public homes, offices and shops – applied the brakes in the fourth quarter, ending almost two years of acceleration, official figures showed yesterday.

They confirmed initial estimates earlier this month that suggested, in particular, that housing demand is cooling.

Experts say this was due partly to the global fallout from the sub-prime mortgage crisis in the United States and partly to local government measures, such as the withdrawal of the deferred payment scheme in October.

The slowdown is set to continue this year. Growth will still be healthy, but considerably lower than last year’s one-record-after-another spiral, experts say.

Most predict a rise in private home prices of 10 to 20 per cent this year – a far cry from the robust 31.2 per cent growth last year.

Private home rental, which caused tenants no end of headaches by shooting up 41.2 per cent last year, are also expected to moderate to between 5 and 15 per cent.

HDB resale prices are projected to increase by not more than 10 per cent, down from last year’s 17.5 per cent. Offices and shops will also fall in line. Price rises are forecast to be less than last year’s increases of 32.6 per cent and 13.2 per cent, respectively.

Volatility in stock markets and the stream of bad economic news coming out of the US have made for a quiet start to the year, particularly in the housing market.

Developers have delayed planned launches of new projects or scheduled upcoming launches well after Chinese New Year, according to industry sources.

Plans to start sales for Marina Bay Suites yesterday, for example, are said to have been shelved until after the festive holiday.

‘We expect the residential market to remain cautious, at least in the first quarter of 2008, until the global situation becomes clearer,’ said Mr Li Hiaw Ho, executive director at CBRE Research.

Demand for homes also appears to have eased.

Although a record 14,811 new homes were sold last year, sales in the last three months contributed only 1,449 of those units – the fewest transactions in a quarter since 2005.

But homeowners can take heart: The boom has enough steam to run for some time before reaching its peak, said property consultants.

‘I would say we could be nearing a peak, but we’re not there yet,’ said Dr Chua Yang Liang, head of Singapore research at consultancy Jones Lang LaSalle.

‘Typically, we will see growth of around only 1 per cent in a quarter before we hit a peak,’ added Mr Nicholas Mak, director of research and consultancy at Knight Frank.

Private home prices rose 6.8 per cent in the fourth quarter of last year, down from 8.3 per cent growth in the third quarter.

HDB resale prices grew 5.7 per cent, compared with 6.6 per cent in the previous three months.

Consultants said while the rises in home prices will slow, prices will not actually fall until at least 2010, when a slew of new homes is expected to be completed.

In the meantime, much of this year’s residential market growth is likely to come from HDB flats and suburban mass market condominiums, which are signs of more genuine home-buying demand.

Speculative demand has already dropped dramatically. A measure of speculation is sub-sales, which are when uncompleted homes change hands. These fell to 513 in the fourth quarter – a third of their level in the previous quarter.

Source: The Straits Times 26 Jan 08

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