Q2 private home prices surge 5.2 percent

Private home prices in Singapore have remained strong in the second quarter, with the residential property price index reaching a record high of 184.1 points.

Based on flash estimates released by the URA, private residential prices rose 5.2 percent quarter-on-quarter in the April to June period.

The figure beats the three percent growth forecast by some analysts. However, market watchers do not expect that the government will be implementing additional anti-speculative measures.

Meanwhile, industry figures showed that the number of caveats lodged in Q2 declined 19.2 percent on-quarter to 7,041.

While sales volume moderated, prices continued to rise, albeit at a slower rate.

Private home prices grew 5.2 percent in Q2, following a 5.6-percent increase in the first quarter.

The growth in Q2 brought the residential property price index to an all-time high, exceeding the market peak of 181.4 points in the second quarter of 1996.

However, analysts said it is too soon to demand further cooling measures.

"Compared to 1996, I think we are a little bit above in terms of prices, especially in mass-market (homes). However in terms of income, I think we are also well above the 1996 level. So in that sense where affordability is concerned, it's still pretty well-maintained. So I don't think there is a bubble over here," said Liang Thow Ming of Credo Real Estate.

Prices for mass-market homes – those that are located outside the central region – recorded the highest growth of 5.7 percent in Q2, due in part to price points set by new developments, such as The Minton and Tree House.

Another factor that drove growth is the resale transactions’ increasing prices in places where many sites from the government land sales programme had been sold in the previous six to nine months, according to consultancy firm CB Richard Ellis.

Private home prices in the prime districts (core central region) and in the city climbed 5.1 percent, while those located in the city fringe (the rest of central region) surged 4.5 percent.

Home prices are also likely to moderate, as the government launches more state land for public tender in the second quarter this year.

"Prices are likely to remain stable or grow very moderately for the next few quarters. This is given that transaction volumes have come off in the earlier quarters and the few months that we've seen. And usually going by the long-term trend, as transaction volume comes down, prices will follow suit. In terms of the rate of increase, it will slow down or remain stable," said Dr. Chua Yang Liang, Head of Research (Southeast Asia) at Jones Lang LaSalle.