New figures showing private home prices rising 0.4 per cent in the third quarter belie growing market softness.
Home loan curbs imposed in late June have hammered prices in the city centre and city fringe, but their effects will take several months to show up in suburban regions, consultants said on Friday.
The rise in the private property price index, released on Friday by the Urban Redevelopment Authority (URA), may therefore fail to immediately reflect the full extent of the drubbing that the market took in the July to September period.
"The residential property market has not been this sluggish since the global financial crisis in 2008 and 2009," said Jones Lang LaSalle Singapore research director Ong Teck Hui on Friday.
The apparent 0.2 per cent rise in private home rents in the three months to Sept 30 also masks a growing number of vacant units.
One major reason that the overall price index seems to contradict the general market slowdown is that there is a lag in the suburban segment, market watchers said.
Suburban home prices climbed in the third quarter, outweighing price drops in the city centre and city fringe.
The effects of the June home loan curbs take longer to reach the suburban mass market segment because that segment is driven by demand from Housing Board flat upgraders, said International Property Advisor chief executive Ku Swee Yong.
Given that HDB resale prices fell only in the third quarter, any drop in upgrader demand and later in suburban private home prices would be seen only in the fourth quarter or later, he said.
Another major factor is the way the URA computes the property price index. The index figure is based on the median price per sqm for units sold or rented in that quarter. If more people buy smaller flats with higher per sq m prices but lower total prices, the price index goes up.
Similarly, a wave of tenants moving into newer homes - which tend to be smaller than older units - in the third quarter has led to a rise in the rental index because tenants are paying more per sq m even if their total rent remains the same, Mr Ku said.
Savills Singapore research head Alan Cheong added that in a quarter with fewer sales, the median figure could disguise a broader slowdown. "One could quite easily think of various permutations where the third-quarter (median) number could still be higher than the second's," he said.
But he stopped short of calling for the computation to be revised, saying: "Statistics have to be interpreted by those with a good grasp of the subject and constructed by those with good integrity and I am confident the URA has both."
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