The charge of the bungalows brigade

URA's sub-index for detached homes soars 37.6%, boosting overall index's gain to 17.6%.

Mon, Jan 31, 2011
The Business Times

By Kalpana Rashiwala

IN a year fuelled by strong liquidity and economic growth, bungalowswere the stars that led the surge in the Singapore property market in2010. Latest data from the Urban Redevelopment Authority shows that itsprice index for landed homes climbed 30.8 per cent last year. Thesub-index for detached houses, or bungalows, soared 37.6 per centagainst a 5.6 per cent rise in 2009.

The index for non-landed private homes rose 14 per cent last year,following a 0.5 per cent gain in 2009. The biggest price hike in 2010in this segment was for completed non-landed homes in Core CentralRegion, which climbed 19.5 per cent last year, although prices ofuncompleted units in the same region rose at a much slower rate of 10.6per cent in 2010.

URA's overall price index for private homes swelled 17.6 per centlast year, after posting a 1.8 per cent rise in 2009. It rose 2.7 percent quarter on quarter in Q4 2010.

Knight Frank chairman Tan Tiong Cheng observed that the index hasappreciated by about 65 per cent over the past five years, translatingto an average annual increase of 13 per cent. 'This is a verysignificant increase considering that we had the biggest financialcrisis during this period,' he added. Developers sold a record 16,292private homes (excluding executive condos) last year, up 10.9 per centfrom 2009 and busting the previous high of 14,811 units in 2007.

The other sectors of the property market also saw sharp turnaroundslast year, according to the latest URA numbers. For instance, theoffice price index rose 18.9 per cent in 2010, against a 16.4 per centdrop in 2009. Flatted factory and warehouse prices, too, shot up 23.7per cent last year, compared with respective declines of 14.2 per centand 16 per cent in 2009.

Looking ahead, market watchers expect some wind to be taken out ofthe residential sector following the latest property cooling measures.Investors are channelling their money to the commercial and industrialproperty segments, which were not the target of the cooling measuresannounced on Jan 13.

DTZ's SE Asia research head Chua Chor Hoon is predicting a minus 5per cent to 0 per cent change in URA's overall private home price indexthis year. Others are more sanguine. Colliers International director ofresearch and advisory Tay Huey Ying forecasts a 5-8 per cent rise withthe increase led by mid and high-end properties.

Prices of mass market homes are expected to stay relativelyunchanged or ease by up to 2 per cent given the ample new supply inthis segment, she said.

As for the landed segment, RealStar Premier Property managingdirector William Wong, who had earlier predicted an average 10 per centrise this year in Good Class Bungalow (GCB) prices - the creme de lacreme of landed homes on mainland Singapore, now expects prices to holdin 2011.

'Transaction volumes are expected to fall 20-30 per cent over thenext 3-6 months. Owners are not prepared to adjust prices downwardswhile buyers are waiting for prices to go down. This may not happen.'

Another bungalow specialist, KH Tan, managing director of NewsmanRealty, said that some sellers have started to withdraw GCBs from themarket following the latest cooling measures as they would face longerholding periods on any replacement bungalows they may purchase becauseof the hikes in seller's stamp duties.

Nevertheless, he predicts an increase of about 10 per cent in GCBprices this year, following last year's appreciation of about 35 percent, because of the limited stock of GCBs, wealth effect from newultra high net worth citizens and low interest rates. On Sentosa Cove,where foreigners may buy landed homes, the price gain this year couldbe higher, about 15 per cent, as 'there are still a lot of rich Chineseforeigners coming in'. Bungalow prices on Sentosa climbed 30 per centlast year on average, he estimated.

On URA's numbers, CB Richard Ellis executive director Li Hiaw Hoobserved that while the price index for uncompleted non-landed homes inOutside Central Region (where mass-market condos are located) hassurpassed the peak in Q2 2008 by 19.1 per cent, the equivalent indexfor Core Central Region (which covers the traditional prime districts,financial district and Sentosa Cove) is still 7.1 per cent below its Q12008 high.

Meanwhile, the National University of Singapore's SingaporeResidential Price Index (SRPI) flash estimate shows that prices ofcompleted non-landed private homes in Singapore's Central region(postal districts 1-4 and 9-11) appreciated 7.8 per cent last year,while the sub-index for the Non-Central region rose 15 per cent. As aresult, the overall SRPI increased 11.9 per cent in 2010. In 2009, thethree indices posted respective gains of 27.3 per cent, 19.5 per centand 22.2 per cent.

URA's data showed that 10,399 private homes were completed last year- close to the 10,488 units in 2009 and 10,122 units in 2008. Theoverall private residential rental index rose 17.9 per cent last year,a sharp reversal from the 14.6 per cent slide in 2009.

Savills Singapore director for residential leasing Patrick Lai saidthat overall residential rents may increase a further 5 per cent in2011. 'We believe that the rental rates for super high-end condominiumsand GCBs will remain robust and are likely to increase by 6-10 per centas more top executives relocate to Singapore.

'For example, we have just leased out a 2,852 square foot unit atThe Orchard Residences for $20,000 per month. We also recently handledthe leasing of a GCB in the Peirce Villas/Swettenham Road neighbourhoodfor $40,000-45,000 per month.'

This article was first published in The Business Times.