Buyers frustrated as residential property prices reach record high

But analysts say property prices may soften in the next few months due to falling sales volume.

URA Flash Estimate of Private Residential PPI found that the prices for Q2 2010 have surpassed a previous peak of 181.4 in Q2 1996.

In a report by Jones Lang La Salle on Thursday on the flash estimate of Urban Redevelopment Authority (URA) for 2Q10, Singapore’s private residential property prices reached a new historical peak of 184.1 on the Property Price Index (PPI), surpassing the previous peak of the market at 181.4 in 2Q96.

Price increases showed signs of a slowdown as the overall price level rose by 5.2% quarter-on-quarter in 2Q10 compared with an increase of 5.6% in the previous quarter, on the back of lower sales volume.

Based on URA preliminary figures, the number of caveats lodged fell by 19.2% q-o-q to 7,041 in 2Q10, although this is still some 53.2% higher than the historical average of 4,597 per quarter from 2000 to 2009.

Against the overall growth trend, non-landed prices, including apartment and condominium, in the Outside Central Region (OCR), which comprises the Central Region outside the CCR, and Core Central Region (CCR), which comprises Postal Districts 9, 10 and 11, the Downtown Core and Sentosa, showed faster growths of 5.7% and 5.1% respectively in 2Q10 than the previous quarter. In particular, buying sentiments in the OCR continued to push prices up to 170.9, another unprecedented high, on the PPI in 2Q10.

“Even though prices in the OCR continue to reach a new high, further anti-speculative measures – which were previously introduced to curb speculation in the mass market – are unlikely as prices in the primary market, a better reflection of current market expectations, are pointing towards retardation. Overall, the falling sales volume in both primary and secondary markets suggests that the overall URA PPI, a lagging indicator of demand, may soften in the next few months. Prices are expected to remain fairly stable and expand by around 1.5% to 2.5% per quarter for the rest of the year,” said Dr Chua Yang Liang, Head of Research South East Asia.