It’s about time we found out how the property market in Singapore performed last year. The Urban Redevelopment Authority (URA) recently released the flash estimates of the price index of private residential property for the 4th quarter of 2009 (flash estimates only ah, don’t get too excited yet). Confirmed figures usually come out 4 weeks after this release.
The prices of private residential property rose from 154.3 in the 3rd quarter to 165.5 points in the 4th quarter of 2009. Note that the index is pegged to the 4th quarter of 1998, meaning 1998 = 100%. Therefore, an index of 165.5 means that prices now are 65.5% more than in 1998. But usually it’s more meaningful to compare the results from consecutive periods.
An estimated 10,000 units were sold by developers in 2009, which is more than double that for the whole of 2008. Some analysts believe that private home prices ended the year 10-20% higher, while in July itself, a record 2,676 units were sold. One of the reasons could be the low SIBOR rates, which housing loans are usually pegged to. It slid from 1.00% in May to, if I’m not wrong, an all-time low of 0.36% in December. But I’m sure that by now, we’ve realized that banks love (our) money, and most have actually increased the spreads that they charge above SIBOR, making SIBOR-pegged loans more expensive.
Reports also stated that non-landed home prices in the suburbs increased by 5.8% in the 4Q. That’s lower than the 16.1% increase in the 3Q but brought the full year increase to 11.2%.
Non-landed homes on the fringes of the city rose 9.5% in the 4Q and all-in-all increased 3.1% in 2009. Non-landed city centre homes were down 2% for the year though, although the increase of 7.1% in the 4Q points to a recovery.
And how did our favourite HDB market end the year?
In the last quarter of 2009, HDB prices rose by 3.8%, bringing last year’s total price rise to 8%. The Resale Price Index (RPI) hit 150.7 in the fourth quarter, compared to the 3rd quarter’s 145.2. The highest peak before that was the 136.9 achieved in the 4th quarter of 1996.
There seems to be an upward trend of Permanent Residents (PRs) purchasing more HDB flats, which isn’t very surprising considering Singapore’s liberal immigration policies. Agencies are reporting between 20-50% of their HDB resale transactions belong to this group.
Unnerved by this unexpected property boom, some economists believe that if left unchecked, a property bubble might form. The last few months have seen the government announcing some measures it’s taking to ‘cool down‘ the market. It has to be done carefully though. If it causes too much of a slide in property prices, consumer confidence might plummet, arresting the already-fragile economic recovery. Anyone remember what happened in ‘96? However, the government’s adoption of an incremental approach this time round indicates that it has learned from its previous follies.
Growth for 2010 is expected to reach 3.2%.
The last three years have seen HDB prices rise by 40%. Now, that’s some growth. So, how much have wages increased?