Singapore property not yet off the boil: Nomura

Home prices in 3Q12 continue to rise at a faster pace despite six rounds of cooling measures.

Here's from Nomura:

In his National Day Rally speech this year, the Prime Minister made a remark that he thinks “housing is off the boil”. If the latest 3Q12 flash estimates of home price indices are anything to go by, however, the housing market looks to be heating up again.

Released on 1 October, the 3Q12 flash estimates of the URA private home price indices show a 0.5% increase, vs. a 0.4% gain during the previous quarter, led by private homes in the OCR (proxy for the mass-market segment), which were up 1% (or twice the pace of the 0.5% in 2Q12). HDB resale prices, on the other hand, gained 2% in 3Q12, compared to a 1.3% rise in 2Q12.

While the high-end segment continued to lag in 3Q12, there appear to be some signs of stabilisation. According to the latest Jones Lang LaSalle 3Q12 estimates, prime luxury prices were unchanged at S$2,380psf, compared to a 2.9% fall in 2Q12 and a 2% fall in 1Q12.

Effectiveness of further intervention likely limited on increasing market desensitisation

That home prices continue to rise at a faster pace despite six rounds of cooling measures (excluding other policy changes such as the higher qualifying household income ceiling for BTO and EC purchases that would have an indirect impact on the private housing market) must surely make the authorities sit up and take note, especially with the unleashing of QE3 (or QE Infinity).

That said, with the market increasingly desensitised against any government intervention (share prices of residential developers hardly changed after the minimum average unit size of 70sq m was announced
on 4 September and subsequent land tenders still attract bullish bids from developers) and the options available to the government increasingly limited (it does not want to “crash” the market), it is hard to imagine the effectiveness of any further government intervention.