The latest estimate released by the Urban Renewal Authority on Monday (April 3) showed that the overall private property price index rose by 6 points to 194.6 in the first quarter, equivalent to a 3.2% increase, up from a 0.4% rise in the fourth quarter of last year.
Non-landed private property prices rose by 2.5%, up from 0.3% in the previous quarter.
When looking at the various types of non-landed private housing, prices in the Other Central Region (RCR), representing mid-range private housing, rose the most, by 4% in the first quarter, up from 3.1% in the previous quarter; prices in the Non-Central Region (OCR), representing mass market private housing, rose by 1.9%, reversing a 2.6% fall in the previous quarter; and prices in the Core Central Region (CCR), representing high-end private housing, rose by 1%, up from a 0.7% rise in the previous quarter.
New private non-landed developments launched in the first quarter included the Sceneca Residence, The Botany at Dairy Farm and Terra Hill. These projects are selling at firm prices and are selling well, supporting the overall increase in non-landed private property prices.
According to Knight Frank's Head of Research, Mr Cheng Wai Ming, the rise in off-site private property prices was mainly driven by the rise in new private property prices.
He said developers had been buying land at good prices over the past 12 to 18 months, pushing the selling prices of new private developments to record highs for their areas.
"Higher prices for new private residential projects are expected to drive up the URA's private property price index this year, while price increases in the resale private property market are expected to be more modest."
Prices of landed private homes rose more than those of non-landed private homes, up 5.7 per cent in the first quarter from a year earlier, up from 0.6 per cent in the previous quarter.
According to CBRE's Head of Research for Southeast Asia, the launch of new landed private homes in the first quarter was the main reason for the overall increase in private property prices.
Among the landed private developments that opened in the first quarter was the Pollen Collection, which was launched in October last year and saw transaction volumes double to eight units in the first quarter, with the median price of a row house rising to $2,199 per square foot from $1,893 in the fourth quarter of last year.
While prices for private homes are climbing, overall transaction volumes slumped to 3,309 units, slipping 8 per cent year-on-year and plunging 38 per cent year-on-year.
Ismail Gafoor, president of Pronex, said: "It is surprising how much prices rose in the first quarter of the year and we expect the rate of increase to slow in the next few quarters as there is still a lot of uncertainty in the market, including high interest rates, geopolitical tensions and a slowdown in global economic growth. "
He believes that the private housing market appears to be starting to stabilise after the government introduced real estate cooling measures last September and with interest rates still rising. As the US Federal Reserve's recent monetary policy stance has softened due to the US banking crisis, the trend in the private housing market is expected to become more pronounced over the next nine months.
Esmay predicts that overall private property prices will rise by 6 to 8 per cent for the year as a whole, with developers expecting to launch 8,000 to 9,000 new units this year, slightly more than the 7,099 units launched last year.
Orangetee & Tie's Head of Research and Consulting, Sun Yanqing, also predicts that private property prices will rise by 5% to 8% this year. The main reason for this is that the US may restrict lending due to the recent banking crisis and the macro-economy may be affected, so lending rates are expected to stabilise in the second half of this year and the rate of increase may slow down, by which time it is believed that more buyers will enter the market.
