Private home prices slow sharply to 0.5% rise in Q3 after cooling measures: URA flash data

Prices of private residential properties inched up 0.5 per cent in the July-September period from the previous three months.
Prices of private residential properties inched up 0.5 per cent in the July-September period from the previous three months.PHOTO: ST FILE

SINGAPORE - Private home prices in Singapore barely managed to hold on to gains for the third quarter as the latest round of property cooling measures implemented on July 6 took their toll, flash estimates from the Urban Redevelopment Authority (URA) on Monday (Oct 1) showed.

Prices of private residential properties inched up 0.5 per cent in the July to September period from the previous three months - to 149.7 points on the private residential property price index - a sharp slowdown from the 3.4 per cent rise in the second quarter and a 3.9 per cent increase in the first quarter.

For the first nine months of this year, private home prices are up by 7.9 per cent, going by URA's latest private residential property price index. Year on year, they have risen by 8.8 per cent, slightly slower than the 9 per cent year-on-year increase in the second quarter.

In the third quarter, prices of non-landed homes rose just 0.2 per cent compared to their 3.2 per cent gain in the previous quarter, while landed properties saw a 1.7 per cent rise, down from the 4.1 per cent hike in the second quarter.

Mr Desmond Sim, head of research for Singapore at CBRE, said it can be seen that measures to curtail the exuberance of the market have managed to do so.

"While the pace of growth has slowed down significantly... to 0.5 per cent based on estimates for third quarter 2018, there is expectation of continued price growth to reflect higher land costs in the next few quarters," he added.

PropNex Realty chief executive Ismail Gafoor said: “Prices generally weakened due to sensitive pricing offered at new launches and existing developments, to the tune of 5 per cent. We expect the year to end with overall price growth of 8 to 9 per cent for 2018.”

“Moving forward, we do not expect prices to tumble because property developers are ‘locked’ in by the high land bid costs,” he said.

Effective July 6, the additional buyer's stamp duty (ABSD) was raised by 5 percentage points for Singaporeans and permanent residents buying a second, third or subsequent residential property, as well as for foreigners buying any residential property.

The loan-to-value (LTV) limits were tightened by 5 percentage points for all housing loans granted by financial institutions.

ERA Realty key executive officer Eugene Lim noted: "It is not the Government’s intention to stop property prices from increasing, but for prices to grow at a sustainable rate, in line with economic fundamentals.

"At the very top end of the market, buyers are still able to afford paying the increased ABSD rates. However, for the general investor population who are looking at suburban and city fringe properties, they are likely to take more time to re-evaluate their options, as the additional 5 per cent in ABSD and lowered loan quantum are sizable financial considerations."

The Government has said the sharp increase in private home prices, if left unchecked, could run ahead of economic fundamentals and raise the risk of a destabilising correction later, especially with rising interest rates and the strong supply of private homes in the pipeline.

Monday's flash data also showed that prices of condominiums and private apartments rose 1.2 per cent in the prime districts or core central region (CCR), compared to the 0.9 per cent increase in the previous quarter.

Prices in the city fringes or rest of central region (RCR) fell 0.8 per cent, after registering an increase of 5.6 per cent in the previous quarter. Prices in the suburbs or outside central region (OCR) edged up 0.1 per cent, after rising 3 per cent in the previous quarter.

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-September. The statistics will be updated on Oct 26 when the URA releases its full set of real estate statistics for the third quarter.