S’pore home prices up again

Published: Tuesday July 2, 2013 MYT 12:00:00 AM
Updated: Tuesday July 2, 2013 MYT 7:01:59 AM

S’pore home prices up again

SINGAPORE: Singapore home prices rose for a fifth straight quarter in the three months to June, and analysts said owners and developers of private apartments in the outer suburbs appear most at risk should the property market correct.

Singapore’s central bank on Friday introduced rules to cap a property buyer’s monthly payments at 60% of income in a bid to stabilise the housing market and to ensure those buying homes would not be caught out by a rise in interest rates.

Based on flash estimates released by the Urban Redevelopment Authority (URA) yesterday, prices of apartments in Singapore’s core central region, which includes the posh Orchard Road district popular with foreign investors, have risen by 49% since the end of the global financial crisis in 2009.

In contrast, prices of homes outside the central region, which are areas more popular with ordinary Singaporeans on lower budgets, have increased by 70%.

Wilson Liew, a property analyst at Maybank Kim Eng, said the large majority of property transactions in recent quarters had been in areas outside the city-centre, whereas activity in the core central region had been muted. “Our view is that the mass market residential segment is the most vulnerable to downside price pressure,” he said.

Shares in Singapore property developers fell yesterday on concerns the latest government measures would crimp demand for apartments, with South-East Asia’s biggest real estate company Capitaland Ltd down 1.6% by 0240 GMT and City Developments Ltd dropping 1.2%.

National Development Minister Khaw Boon Wan, in remarks reported by local media yesterday, said the tougher rules were aimed at property investors rather than potential home owners.

“It’s not really a cooling measure as such… It is a structural measure which is good to ensure a more stable property market,” he told the Straits Times, adding that current low interest rates were not sustainable.

“We do have buyers stretching themselves, buying second or third properties,” Khaw said.

The URA flash estimates showed private residential property prices rose 0.8% in the second quarter from the first three months of the year, accelerating from the preceding period’s 0.6% gain.

The rise in the index hid a divergence in the housing market, however, as prices of non-landed homes in the core central region fell, while prices outside central region rose 3% quarter-on-quarter, more than double the previous quarter’s 1.4% pace. — Reuters

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