Monday, April 2, 2012

Singapore private property prices fell first time in 3 years

Urban Redevelopment Authority, URA, has just released the flash estimate of the Singapore private residential property price index for first quarter of 2012 and the estimates "indicates that overall private residential property prices have declined from the quarter before. This is the first time the price index is declining since second Quarter of 2009. Past 9 years, the prices went up continuously thanks to artificially low interest rates, a high demand and non stop flow of printed money from West and China.

Although there is a price decline in the index, the decline is still marginal (index slightly moved down from 206.2 points in 4th Quarter 2011 to 206.0 in 1st Quarter 2012) and next quarters can tell this will be a trend or not. As you can see from the chart below, the index has already surpassed the levels of bubble times of 1996 and 2008 but was moderating in the last 9 quarters.

(If you are asking yourself whether it is a good time to buy private property in Singapore in 2012 take a look at the graph below. Is it a good time to buy at what may end up as peak price?)

URA Singapore residential private property index - Source : URA

The decrease in the price index how ever does not point to an overall price correction. While the prices of prime properties are falling, prices of so-called mass market private properties, which are the ones many can dream to buy, are still rising. According to URA web site "prices of non-landed private residential properties decreased by 0.9% in Core Central Region and 0.7% in Rest of Central Region in the quarter.  Prices in Outside Central Region however increased by 1.2%, compared to the 0.6% increase in the previous quarter".[1]

Propnex CEO Mohamed Ismail expects private home prices to fall by 5 per cent this year in the Central Core Region and the city fringes. Prices of private residential properties in the suburbs could increase by between 3 and 5 per cent this year, he added.[2]

Note that these are flash estimates which will be updated a month later when URA releases the full 1st Quarter 2012 real estate statistics, when more data are captured. According to URA, "past data have shown that the difference between the quarterly price changes indicated by the flash estimate and the actual price changes could be significant when the change is small. The public is advised to interpret the flash estimates with caution."[1]

[1] -  Prices of Private Residential Properties Register Marginal Decline in 1st Quarter 2012
[2] - Private home prices fall

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