Private home prices in Singapore continue to creep up in the first quarter of this year although at a slower pace.
The Urban Redevelopment Authority (URA) said prices were up by 5.6 per cent, marginally higher than the 5.1 per cent hike initially estimated.
And analysts said the government’s cooling measures have been effective in reining in run-away price increases.
Private homes sales have risen in recent months on the back of improving sentiment.
But price growth, on the other hand has slowed for the second consecutive quarter to 5.6 per cent in Q1.
Landed homes led the rise in prices with an 8.3 per cent increase, similar to the fourth quarter of 2009.
Market watchers said the moderation is partly due to cooling measures which kept some speculators at bay.
Tay Huey Ying, director, Research & Advisory, Colliers International, said: “This is evidenced by the fall in sub-sale transaction to 8.5 per cent of all transactions in 1Q.
“This is down from the double-digit percentages that we saw in the past 11 quarters. So I think this goes to show that there has been some impact on speculators segment of the market and that would have taken some pressure off prices.”
Sub-sales refer to re-sales that occur before a project is completed and are usually used as an indicator of speculative activities.
URA said private home prices rose across all segments.
Prices of homes in the city increased by 4.4 per cent while those in the city fringe cost 7.9 per cent more.
Meanwhile, prices of mass market homes were up by 4.3 per cent in Q1.
Analysts said price resistance could set in as the Q1 prices are now 30 per cent above the mid 2009 bottom.
Colin Tan, director, head, Research & Consultancy, Chesterton Suntec International, said: “Assuming there are no more cooling measures, I would think the market is still awash with liquidity and this should translate to more sales.
“Whether it will translate into higher price increases, that remains to be seen. There will be some increases but whether it will continue at a very strong pace is really debatable.”
Market watchers project prices of high-end homes to go up by between 15 and 20 per cent in 2010 while suburban home will see a smaller gain of 10 per cent.
Apart from the primary market, the resale market has also been active in Q1, with a total of 4,261 units sold. This is up by 6.5 per cent from the 4,001 resale homes transacted in the previous quarter.
Going forward, the increase in home prices is also likely to lend support to rental growth.
Rents for private homes climbed 4.7 per cent in the first quarter and could strengthen by up to 15 per cent this year. – CNA/vm