Singapore Q2 private home price +1.9%; slowest in seven quarters

Singapore private home prices rose by the slowest pace in seven quarters but resale prices of government-built HDB apartments accelerated in the April-June period, suggesting authorities could introduce further measure to cool the property market.

The Urban Redevelopment Authority (URA) said on Friday its private residential property index gained 1.9% in April-June from the first three months of 2011, slower than the 2.2% pace recorded in January-March.

The percentage rise was the smallest since the fourth quarter of 2009, URA said in a statement.

 

An index from the Housing and Development Board (HDB), however, showed resale prices rose 2.9% in the second quarter, faster than the 1.6% gain in January-March and 2.5% increase in fourth quarter 2010.

 

Over 80% of Singaporeans live in HDB apartments, and rising property prices was one of the key issues during the May general elections that saw the opposition make historic gains against the city-state’s long-ruling People’s Action Party.    

“I don’t think drastic measures are needed but more measures will have to be taken,” said P.K. Basu, chief economist for Asia excluding Japan at Daiwa Capital Markets in Singapore.

 

“There are risks elsewhere in the region, and you don’t want prices to rise too much when there are risks from a bubble bursting in China,” he added.

 

Singapore, like Hong Kong and China, has been trying to cool its property market amid flush liquidity and interest rates that are near record lows.

 

Banks in the city-state currently offer mortgage packages with first-year interest rates of less than 1%.

 

Steps taken by authorities so far this year include sharply increasing the sale of land for residential development and setting tougher lending limits for buyers with existing mortgages.

 

In addition, people who buy and sell a property within four years will have to pay a seller stamp duty, which stands at a hefty 16% of the selling price if the unit is sold in the first year.

 

Mohamed Ismail, CEO of PropNex, a property realtor, said HDB prices were unlikely to soften till perhaps the fourth quarter when new supply starts come onto the market, based on information from the firm’s housing agents.

 

Private home prices in the city-state rose 17.6% last year despite government attempts to cool the market in February and August. Resale prices of HDB apartments gained 14%.