Prices for mass-market condos in Singapore continue to rise

The latest estimates from the National University of Singapore (NUS) show that prices of non-landed private homes in Singapore’s Central region (districts 1-4 and 9-11) have appreciated 7.9 per cent in the first 11 months of 2010 from the end of 2009, according to The Business Times.

The NUS’s latest findings are in line with what local property agents have been reporting about the rise of mass-market condo prices, while prices of prime and luxury condos have yet to touch their 2007 records.

DTZ executive director Ong Choon Fah said that entry-level suburban condos had strong demand in 2010, riding on demand from those looking to upgrade in a buoyant resale market for Housing Development Board flats (HDB).

“The trend of developing a higher proportion of smaller units in private residential projects has spread from the prime districts where rental demand is stronger to the suburbs,” she said. “This has also helped to boost sales of mass-market projects by making the lump sum investment more palatable to buyers.”

According to Ong, developers of suburban projects started to offer some of the innovative features, such as sky gardens, which in the past were available only in prime area projects.

Meanwhile, Tan Tiong Cheng, chairman of a property consultancy firm Knight Frank Pte Ltd, said that prices of high-end condo did not increase much in the past year due to weak foreign demand, especially when compared with the previous bull run in 2007.

“These days, buyers from the West, Middle East and Russia seem to be out of the equation. Also Western bankers were a significant buying contingent in 2007 but post-crisis, banks are less generous with remuneration,” he said.

Despite being wrong with their earlier forecast of stronger price appreciation for high-end condos compared to those in the mass-market for 2010, industry experts still predict the same trend in 2011 as there have already been significant price hikes in the mass-market segment.

According to  analysts, if the government manages to control HDB resale prices, that will have an impact on upgrader demand for entry-level condos. In addition, any interest rate hike, or further property cooling measures, will likely to affect demand in the mass-market segment rather than on upmarket condos.