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July 26, 2008

Singapore: Home prices slow sharply in Q2
Singapore private home prices rose just 0.2 percent in April-June, the third straight quarter of slower growth as worries over the economic outlook ended a four-year housing boom, Reuters reported Friday, quoting the data from the Urban Redevelopment Authority (URA).

The agency said the price index for private homes, an indicator of inflation holding at 26-year highs, rose to 177.5 for the three months ended June from 177.2 in the previous quarter.

The 0.2 percent increase was a sharp slowdown from a rise of 3.7 percent in the first quarter of the year, but this was still up 20.1 percent from a year earlier.

"This softening in prices should last until next year. But we think mid-term prospects for Singapore property could still be bright because of economic restructuring," said Tay Huey Ying, head of research for property consultants Colliers International.

Prices in the core central region of Singapore, which comprises mostly luxury apartments, fell 0.1 percent, while other regions improved by 0.7-0.9 percent.

Tay said property prices could fall further this year as the market enters a traditionally quieter period, particularly with the Chinese seventh lunar month in August which is viewed as an inauspicious period for home purchases.

Home prices soared 31 percent in 2007, boom fuelled by strong growth in Singapore's economy and property speculators, but an uncertain economic outlook and a looming housing glut are threatening to plunge the market into a prolonged downturn.

Some analysts predict property prices could fall by as much as 40 percent by 2011, dealing a heavy blow to top builders such as CapitaLand , Keppel Land and City Developments .

Sales volumes for private homes sank to a five-year low in the first quarter of 2008 as government moves to curb property speculation took effect and economic fears kept buyers at bay.

While second-quarter sales more than doubled to over 1,500 units as more projects were launched and some developers cut prices, volumes were still less than a third of the units sold in the same period last year.

The URA said that over 67,500 private residential units were in the pipeline, of which about 46,500 units were expected to be completed by 2011.

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