Prices of completed non-landed private homes continued their slide last month, going by the flash estimates of the Singapore Residential Price Index, dragged by prices of both large and small units and across regions.
The overall index, which tracks a basket of completed residential units, dipped 0.4 per cent in February. Values of these units are marked-to-market based on transacted prices over the month.
Prices for the shoebox units of 500 sq ft or less marked the biggest fall of one per cent, compared to a 0.5 per cent dip in January.
Excluding the small units, home prices in the central region still edged down by 0.6 per cent month-on-month, while home prices in the non-central region slid 0.2 per cent.
The central region, as defined in the data, refers to districts 1 to 4 (including the financial district and Sentosa Cove), and the traditional prime districts of 9 to 11.
The latest changes in the price indices created by the National University of Singapore reflect waning demand for resale private homes, which is more pronounced in the central region where there is more unsold stock, analysts say.
Again, the total debt servicing ratio framework that caps loan limit at 60 per cent of gross monthly income is said to be the cause of the reduced demand for resale units. Meanwhile, many HDB upgraders are waiting to snap up suburban condominiums at more attractive prices, analysts observed.
“There could still be a mismatch of expectations of both buyers and sellers in the resale market,” said ERA Realty key executive officer Eugene Lim, adding that the falling trend may continue as low sentiments play out for now.
As for shoebox units, prices may continue to come under pressure as more such units reach completion amid weaker rental demand, said Mr Lim of ERA.
According to URA data, the vacancy rate of all completed non-landed residential properties has increased to 7.1 per cent in the fourth quarter of last year, up from 6.1 per cent a year ago, and nearing the 7.3 per cent level seen in the third quarter of 2009.
Another 17,540 non-landed residential units are expected to receive the temporary occupation permit this year, up from 13,150 units last year.
Source: Business Times – 29 March 2014