Source : Straits Times – 2 Sep 2009
THE run-up in Singapore’s private home prices may
fizzle out next year, as several obstacles are still impeding global growth
momentum.That is the view of London-headquartered Royal Institution of
Chartered Surveyors (Rics), which represents and regulates property
professionals and surveyors. It issued a report on Monday concluding
that the sharp residential market rebound here may peter out. It cited higher
unemployment in Singapore as a potential risk factor that could undermine the
property rebound here.In contrast, top local developer CapitaLand
remains bullish in its outlook for Singapore, and will soon launch a 1,000-unit
condo in Gillman Heights and 165 resort-style homes at the former Char Yong
Gardens site. CapitaLand’s upbeat outlook on the market here was reflected in
slides presented by its vice-president of investment Anson Lim at a CapitaLand
CEOs forum held yesterday.
The current market upswing is being driven
by positive sentiment and supported by long-term fundamentals, according to the
slides. CapitaLand expects the Urban Redevelopment Authority price index to
recover between 5 per cent and 10 per cent for the rest of this year, from the
trough in the second quarter. The index showed a fall of 4.7 per cent in the
second quarter. The Rics report was rather less optimistic. It said
while an upturn in activity is already well under way in the residential
market, significant risks present a challenge to the market in the medium
term.
‘Labour market indicators, such as unemployment, certainly point
to a less benign story,’ it said. Unemployment in Singapore looks set to rise
sharply in the coming quarters. Based on previous relationships with the world
trade index, unemployment could easily climb to 5 per cent before the year is
up, it said.
Singapore’s unemployment rate was 3.3 per cent in June.
Labour chief Lim Swee Say said last month that the jobless rate this year was
unlikely to match the peaks of past downturns. The rate peaked at 4.3 per cent
in 2003.In the short term, residential prices may be propelled higher
on an improved global economy into the fourth quarter, said the Rics report.
However, the duration of previous downturns indicates further declines
in prices may well occur, should global trade momentum fall short in the medium
term as high debt and rising real interest rates weigh on the strength of the
global growth recovery, it said.This, it added, would temper buoyancy
in the Singapore labour market and in turn would prevent a return to previous
highs in the property sector. The Rics report also noted that the
run-up in office prices has been less acute, compared with residential prices’.
‘Despite improved signs that economic activity in Singapore has passed
its worst point in the cycle, the global economy will once again be pivotal in
dictating the sustainability of that upturn, with real property prices unlikely
to surpass recent highs in the coming quarters,’ it said.
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