Private property prices set to keep rising in 2013: Report
SHARPLY rising land costs, strong developer balance sheets and low interest rates should all combine to make 2013 another halcyon year for the property industry, an expert said.
Overall private home prices are likely to keep climbing on the back of rising land costs, increasing by up to 10 per cent next year, Savills Singapore research head Alan Cheong said in a report released yesterday.
Non-landed mass market homes are expected to see the steepest rise of 10 to 15 per cent, while the luxury market may also enjoy a 3 to 5 per cent price gain, surpassing its previous peak in 2007.
This is because astute buyers will continue to seek good buys in the luxury segment, as prices here are still lower than in Hong Kong, Mr Cheong added.
The property market has enjoyed a banner year, with a record-breaking 19,792 new homes sold in the first 10 months of the year, surpassing the previous high of 16,292 for the whole of 2010.
Executive condominiums (ECs) have also enjoyed a spectacular run, with more than 4,000 units expected to be sold by the end of the year – another record.
Only 3,935 EC units were sold in 2010 and last year combined.
“Due to a significant run-up in private condo prices, ECs will remain an attractive long-term investment asset, with demand probably surpassing that of 2012,” the report noted.
But tiny shoebox homes of 500 sq ft or less seem to have fallen out of favour with home buyers.
The proportion of shoebox homes sold, out of all new condo sales, has fallen from a three-year peak of 21 per cent in the third quarter of last year to a low of just 7 per cent in the fourth quarter of this year.
This is also well down from the three-year average of 14 per cent, Savills’ noted.
“The downtrend could be due to fewer shoebox units being built. There has also been an increase in demand for larger-sized units in tandem with the growth in wealth here,” the report said.
But the overall property market remains resilient and now has “too strong a momentum to stop”, Mr Cheong added.
Quantitative easing in the United States should see liquidity flowing into Asian economies like Singapore in search of a safe haven and currency appreciation.
Coupled with rock-bottom interest rates that are likely to remain low next year, some fresh external demand could be anticipated, he said.
However, this may be offset by local buying fatigue from the many new launches over the past years and increasing home completions.
Barring further property measures, total primary sales may hover between 16,000 and 18,000 units next year, less than this year’s likely record of 23,000 to 24,000 units, the report noted.