Prices of homes in the private resale sector remained flat in August following a similar pattern the month before.
(Prices for private resale homes remain flat for the second month in a row.Image courtesy of thinkstock.)
This is according to the Singapore Residential Price Index (SRPI), an index that tracks transactions in completed projects. Flash estimates of the SRPI indicate zero overall price growth in August, while revised numbers for the month of July also showed zero growth in overall residential prices. Previous flash estimates for July showed a 0.2% overall rise. In June this year, prices increased 0.7% overall.
What, then, do these flat lining prices mean? Insiders say the prices suggest buyers are taking a cautious approach to property due to the current economic uncertainty. Speaking to The Straits Times, they said the flash August values reflected that affordability was a top priority among buyers.
Coincidentally, the previous time the index reached a month-on-month plateau was in July 2010, observed DTZ South-east Asia research head Ms Chua Chor Hoon.
However Associate Professor Lum Sau Kim of the National University of Singapore’s (NUS) Institute of Real Estate Studies and Department of Real Estate, whose team compiles the index, explained that the current situation should not be directly compared to that of last July. This is because the index methodology was altered this July to “account specifically for the influence of small or shoebox units”. Said Lum, “What we can say is that our August flash estimate shows that overall housing prices in the non-landed private market have remained relatively unchanged between July and August based on data captured by September 21.”
Indeed, August’s flat price index could be attributed to the rising values of shoebox flats being offset by modest movements in central and suburban Singapore. These shoebox flats – typically 500 sq ft or below – saw a price growth of 3.1% in August, rebounding from a 0.5% dip in July. Head of research at Jones Lang LaSalle South-east Asia Dr Chua Yang Liang said the rise in shoebox prices for August could be attributed to more buyers turning to cheaper apartments. “At the end of the day it's about affordability... it's the total quantum, total lump sum that buyers are looking at. Shoeboxes tend to fare better.”
DTZ’s Ms Chua also commented that the outlook is more cautious now, although she added the monthly index tended to be volatile, so revised values could turn out quite different. One such example can be found in flash estimates for July shoebox unit prices, which indicated a 1.4% growth. The revised numbers showed a drop by 0.5%.
On the other hand, August unearthed little price movement for regular-sized flats in central and suburban areas. Central area values dropped 0.7%, even after a 1.3% dip in July. Things look better on the suburban front as prices rose 0.5% in August, after July’s 1% increase.
Said Dr Chua, “The market is in a bit of a wait-and-see (mood), given the economic uncertainty.”
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Related Categories: General, Private Residential
Tags: Central Area Housing, National University of Singapore, NUS, private property prices in Singapore, private resale home prices, Shoebox Flats, Shoebox Units, Singapore Residential Price Index, SRPI, Surburban Housing
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