Singapore private residential property values continue to rise
Private residential property prices in Singapore are continuing to rise with values increasing in the second quarter of the year and sales increasing, the latest figures show.
Average prime and central capital values increased by 8% and 7.6% respectively on the back of encouraging sales volumes, according to a new report from international consultants Jones Lang LaSalle.
The prime real estate market saw average capital values for typical prime properties reaching $1,350 per square foot, surpassing the last peak for the first time. But while average capital values for luxury prime properties reached $2,500 per square foot, they are still some 8.4% below peak.
The growth in the real estate market has also been supported by an improvement in rental income. Prime rentals have grown by 10.8% on average, over the first half of this year. Jones Lang LaSalle said this is supported by increased leasing demand from expatriates in the financial and petrochemical sectors.
There is some softening of overall demand from foreign real estate buyers due to uncertainties arising from the eurozone debt crisis but Chinese buyers are still prominent, the report also shows. It said Chinese buyers accounted for 18% of caveats lodged by foreigners in the secondary market in the second quarter of 2010, up from 6.2% in the first quarter of 2007.
It added that high net worth individuals from China are interested in property investment in the country as luxury home prices are around 24% below those in Hong Kong and 10% below their peak.
But Jones Lang LaSalle’s head of Research for Southeast Asia, Chua Yang Liang said the resale market is expected to see a further slowdown in both transactional volumes and price growth in the next half of the year, following cues from the primary market, which has seen fewer project launches and lower sales volume in recent months.
Indeed, the latest figures from the Urban Redevelopment Authority show that although prices are still rising, the pace of the increase is slowing. Average price increases of 5.2% in the second quarter were just below the 5.6% of the first three months of the year.
Joseph Tan, executive director (residential) at consultants CB Richard Ellis, also believes that prices will fall as measures such as the 1 to 3% tax on residential properties sold within one year of purchase and a lowering of the loan-to-value limit on private housing loans to 80% take effect.
According to Nicholas Mak, real estate lecturer at the Ngee Ann Polytechnic, property prices will rise at a slower pace this year, at a year-on-year rate of 12 to 18%.