Prices of private homes in Singapore grew at a slower pace in the second quarter than initially projected - climbing at just 0.2 per cent against an earlier estimate of 0.4 per cent.
This is a far cry from the 3.7 per cent growth in the previous three months.
Analysts said this is the first time that final numbers have come in lower than flash estimates, suggesting that home prices are finally softening.
Mass market homes are carrying the overall price increase in the private residential property sphere as luxury home prices nudge downwards.
Prices outside the central region were up by 0.9 per cent, compared to a 0.1 per cent dip in the core central region.
Leonard Tay, director of Research, CB Richard Ellis, said: “Overall, we see a return of volume in (the) residential market in second quarter as quite encouraging.
“In the next two quarters, at least for the whole of 2008, we think volume will be sustainable and we expect transaction volumes for new home sales to finish the year at 4,000 to 5,000 units.”
In the second quarter, 70 per cent of new home sales were from the non-central areas. Colliers said Singapore’s positive mid-term prospects on the back of the completion of its two integrated resorts and Marina Bay Financial Centre will help to hold prices steady, and ensure that they do not decline by more than 3 per cent in the third quarter.
Overall, analysts said the residential property sector fared reasonably well in the first half of 2008, given the difficult external environment.
Ku Swee Yong, director of Marketing and Business Development, Savills (Singapore), said: “Transaction levels, price levels have held up pretty well. Most people have forgotten that the transaction in the first half of 2005 is similar to that of today. So it’s not as bad as what the market thinks.”
In the public housing market, resale prices continued to increase on the back of strong demand. They rose by 4.5 per cent, up from 3.7 per cent in the first quarter.
Meanwhile, office rentals went up by 6.3 per cent in the second quarter - the lowest increase in the past two years.
Analysts said they expect rents to remain flat for most of 2009 before trending downwards in 2010 to what they call more sustainable levels of S$12 to S$15 psf per month in the core business district.
In the next six to 12 months, landlords are expected to shift from profit focus to tenant retention as tenants start resisting further rental price increases.
In the industrial property sector, strong demand has pushed the average occupancy rate for factories to its highest since 2000, at 93.1 per cent. The take-up for warehouses also increased by 0.4 percentage point in the second quarter.
Despite the healthy take-up for both types of industrial space, the rental index for warehouses has remained unchanged for the quarter, while the index for factories rose by only 2.3 per cent quarter-on-quarter in the second quarter, compared to a quarter-on-quarter increase of 5.7 per cent in the first quarter.
As such, demand for industrial space is expected to remain healthy in the third quarter, but rents may only see a slight increase.
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