March 1, 2011

Non-landed private home prices up in Jan

2.6% jump in NUS index surprises analysts


PRICES of non-landed private homes rose 2.6 per cent in January, according to the monthly index compiled by the National University of Singapore (NUS).

NUS’s Singapore Residential Price Index (SRPI) shows that the growth in home prices gained momentum last month. Prices rose one per cent in December 2010 and remained flat in November.

For the whole of 2010, the SRPI climbed 11.9 per cent.

Analysts were surprised by the larger than usual jump in the number for January 2011, as the government imposed more demand-side measures to cool the property market in mid-January.

But most of the gain could have been racked up in the two weeks before the measures were implemented, they said.

Knight Frank chairman Tan Tiong Cheng said that it is possible that prices could have climbed before the measures were announced on Jan 13.

He also said that the large number of small, or shoebox, units sold in January could have pushed up the index as such units sell for higher per square foot prices.

NUS computes the index using the market values of a basket of completed properties. Uncompleted projects are not included in the basket, but the impact of new launches on the prices of completed properties in the vicinity is factored in.

According to the NUS index, prices of non-landed properties rose in both the central and non-central parts of Singapore in January.

The sub-index for the central region showed that in January 2011, prices of non-landed private homes in Singapore’s central region (districts 1-4 and 9-11) appreciated by 2.7 per cent.

Prices rose by a slightly lower 2.5 per cent in the non-central region.

Developers and analysts have said that private home prices may fall this year following January’s anti-speculation measures, although they are not expecting a sharp drop.

Private home prices could fall 3-5 per cent this year but are unlikely to plunge, said City Developments executive chairman Kwek Leng Beng last week.

UBS Investment Research analyst Adrian Chua likewise expects mass-market prices to fall 5-10 per cent this year, with the other segments remaining relatively stable.

‘However, we do not think that prices will collapse, even as the policy regime enters uncharted waters in terms of the severity of the cumulative measures,’ said Mr Chua in his Feb 23 note.