Private home prices post 1% increase for 2017

Private residential home prices rose 0.7 per cent in the three months to Dec 31 last year, following a similar 0.7 per cent increase in the previous quarter, according to flash estimates released by the Urban Redevelopment Authority (URA) yesterday.

For the whole of 2017, prices appreciated 1 per cent, in contrast to the 3.1 per cent decline in 2016.

For non-landed private homes, prices rose 0.7 per cent in the fourth quarter, compared with a 0.6 per cent gain in the third quarter. But landed home prices climbed at a slower pace of 0.6 per cent in the fourth quarter, following a 1.2 per cent hike in the third.

URA's breakdown of non-landed private home prices by region in the fourth quarter showed that the steepest gain of 1.6 per cent was in the prime areas or core central region (CCR), following a 0.1 per cent increase in the previous quarter.

Prices in the city fringe or rest of central region (RCR) went up by 0.2 per cent, slower than the 0.5 per cent hike in the third quarter.

Similarly, prices in the suburbs or outside central region (OCR) rose at a slower pace of 0.6 per cent, after posting a 0.8 per cent increase in the preceding quarter.

For the whole of 2017, prices in the CCR, RCR and OCR rose 0.8 per cent, 1.6 per cent and 1.2 per cent, respectively. The flash estimates are compiled based on transaction prices given in contracts submitted for stamp duty payment and data on units sold by developers up till mid-December. The statistics will be updated on Jan 26, when the URA releases its full set of real estate statistics for the fourth quarter of 2017.

Property consultants note that the increase in private home prices last year was driven by higher sales volumes of private homes in both the primary and secondary markets amid improving sentiments, especially after the Government tweaked the seller's stamp duty (SSD) in March last year.

"There was pent-up demand for private homes from owner occupiers as well as investors. Most of these buyers had been waiting on the sidelines for the cooling measures to be lifted but decided not to wait further," said Edmund Tie & Co research head Lee Nai Jia.

JLL national director Ong Teck Hui said: "In both the third and fourth quarters of 2017, the indices for all sub-markets were in positive territory, reflective of a broad-based recovery. These trends confirm that price recovery in the private residential market is likely to be on a firm footing."

Some analysts expect private home prices to continue appreciating on the back of higher land prices paid by developers last year.

PropNex Realty chief executive Ismail Gafoor predicts a 6 per cent to 8 per cent rise in URA's private home price index, while it is a 4 per cent to 8 per cent increase for Dr Lee of Edmund Tie & Co.

But ERA Realty Network's key executive officer Eugene Lim expects only a moderate rise of 1 per cent to 2 per cent this year. He noted that except for the tweak to the SSD, all of the other property cooling measures as well as the strict property financing rules remain unchanged.

"We are not in a season of runaway price hikes. Buyers remain price-sensitive and selective."

A version of this article appeared in the print edition of The Straits Times on January 03, 2018, with the headline 'Private home prices post 1% increase for 2017'. Print Edition | Subscribe