OPINION

Krisana Gallezo

Hopes fade for more affordable homes in 2013

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otwithstanding the government’s move to cap the mortgage loan tenure in October, home prices across the board have continued to rise at a faster pace in 4Q12 at 1.8%. The latest figure has triggered the introduction of more cooling measures early this year but experts are wary that none of them will significantly impact on prices. Experts note that 2012 measures aren’t totally a failure as on a full-year basis, private property prices only rose 2.8% YoY, below the 5.9% in 2011. They believe though that strong mass market demand will continue to push prices up. Lower volumes and fewer launches CIMB analyst Donald Chua explains that while price growth persisted throughout 2012, 4Q’s price increases came with lower volumes and fewer launches in November. Robust home sales are thus attributed to discounting schemes to lure buyers. A case in point, Chua says, is CDL’s Echelon which was 70% sold on its public launch week late December, on the back of 1517% discounts from list prices. “We continue to expect resilient demand, though a large amount of physical completions expected in 2013 and more launches/ discounts to clear old inventories could rein in 2013 prices and volumes.” Policy changes to stir sales Nomura analyst Min Chow Sai meanwhile argues that market anticipation of policy changes will actually boost sales in the near term. “The October measures were the sixth set of policy changes introduced by the government since September 2009 but the market is clearly desensitized. Ironically, the market’s anticipation of further policy changes may even have a positive impact on home sales in the near term (i.e. the “buy before it becomes more restrictive” mentality), as suggested by the recent robust take-up of new launches such as Echelon.”

Property Price Index (PPI)

Source: CIMB, URA

mass-market homes. Among property segments, prices of non-landed private homes in OCR increased the most – rising 3.4% QoQ, a stronger uptick from 3Q’s 1%. Chia adds that the price appreciation in the OCR also drove home buyers to consider homes in the central region, as the price gap between new massmarket homes and completed higher-tier properties continued to narrow. This, she said is illustrated in prices of non-landed housing units in the CCR (Core Central Region) and RCR (Rest of Central Region) rising by a faster 0.8% and 0.9%, respectively, in 4Q compared to the corresponding increases of 0.1% and 0.8% three months earlier. “The increased momentum in the QoQ price up-trend – particularly in the mass-market housing segment, as well as the return of buying interest in the high-tier segments – are likely to keep the authorities high on guard again and have further heightened policy risks in the residential sector.”

Future trends Chia believes that low interest rates are likely ““Home prices across the board have to continue to be supportive of home-buying continued to rise at a faster pace in 4Q12 demand, while the volatile markets could push investors to seek refuge in the property sector at 1.8%.” that proved to be resilient to external shocks in the past year. Downside potentials however may come from sizeable residential supply that will come onDemand drivers stream in the next few years, and the growing inertia Low interest rates and high liquidity continued towards further price appreciation is likely to keep to persist in the fourth quarter of 2012 and drove prices in check. The risk of further cooling measures demand for homes. Colliers International director from the government should also put developers and of research and advisory Chia Siew Chuin explains the majority of home buyers on a cautiously optimistic that the overwhelming popularity of homes in OCR stand and contain their risk appetite, she says. (Outside Central Region) helped to boost prices of 46 SINGAPORE BUSINESS REVIEW | FEBRUARY 2012

BY KRISANA GALLEZO Senior Reporter krisana@charltonmediamail.com

The overwhelming popularity of homes in Outer Central Region helped boost prices of mass-market homes.