Index shows private resale home prices sliding

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Dec 29, 2010
Index shows private resale home prices sliding

By Esther Teo

HOME buyers looking at the resale market rather than at the buoyant new launch segment could benefit from a break in rising prices, according to new data released yesterday.

For the second consecutive month, the National University of Singapore's Singapore Residential Price Index, which tracks only the prices of completed projects, fell.

Flash estimates suggest it was 0.2 per cent lower last month than in October. And revised estimates indicate that prices in October were 0.6 per cent down on the previous month's, after having climbed 1.1 per cent per month in both August and September.

Prior to October, the last time the overall index fell was in July when it dipped 0.1 per cent.

Comparing central and non-central areas, home prices in central locations remained flat last month after falling 1.3 per cent in October. In non-central areas, home prices slid 0.3 per cent following their staying flat the previous month.

Experts said the index shows that prices are stabilising - particularly in non-prime areas where buyers are more resistant to higher prices and likely to be affected by the Government's August cooling measures to a greater extent.

Some believe the index has highlighted the emergence of a two-tier market, with newer condominiums continuing to fetch benchmark prices while older completed projects stabilise or even decrease marginally in price.

Ms Tay Huey Ying, director of research and consultancy at Colliers International, said the second consecutive month-on-month slide was an indication of softening interest for older properties as buyers with a preference for everything new flock to new completions and launches. This is especially so since developers stepped up their launch activity last month, when their combined launch volume reached a 16-month high of 2,329 units, she added.

Mr Ong Kah Seng, senior manager of Asia-Pacific research at Cushman & Wakefield, said that the two-tier pricing market is likely to persist with buyers continuing to be enticed by new properties' more exciting offerings.

Still, he expects an increasing number of home buyers to purchase resale properties, given that they represent 'a cheaper alternative to suburban condominiums, offer almost immediate occupation and allow the direct benefit of owning a private property'.

Mr Ong added that although the cooling measures had done little to reduce home buying interest, they had served to minimise price increases, particularly for suburban condominiums.

DTZ's head of South-east Asia research Chua Chor Hoon said that the measures, which have hit the Housing Board market harder than other segments, appear to have filtered down to the private sector.

The price index, which tracks the price movement of non-landed homes completed between October 1998 and September last year, does not capture the price movement of newly completed or soon-to-be- completed projects. The index also does not track the transacted prices of homes sold in the primary market.

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