April 2, 2009
City fringe home values fall the most
THE property downturn has crossed an unexpected frontier, with the index measuring the values of private flats on the city fringe falling below that which tracks those in suburban areas - the first time this has been recorded.
Values for private units closer to the city are typically thought to hold up better than those in the suburbs but their rate of price decline in the first quarter means that this belief may no longer hold true.
Simply put, a dollar invested in a suburban flat is holding its value better than the same ploughed into a city fringe unit, if the investments were made in the last quarter of 1998.
The Urban Redevelopment Authority (URA) uses the fourth quarter of 1998 as a base for compiling its value indexes for three parts of Singapore.
The anomaly arose after flash estimates yesterday showed that prices of city fringe flats fell by 17.2 per cent, the biggest fall of any housing sector. City centre flat prices dipped 15.2 per cent, while suburban ones slipped only 7.5 per cent.
Knight Frank's director of research and consultancy, Mr Nicholas Mak, said the first-quarter moves could be a 'statistical blip'. 'It's likely a one-off thing. If it were to continue in the next two quarters, we could have some sort of a price gap compression,' he said.
If mid-end property prices are diving at such a high speed, they would soon be near mass-market levels, he said.
This will not be sustainable as people who live in the suburbs will then upgrade to homes nearer to the city, said Credo Real Estate's managing director, Mr Karamjit Singh.
The URA began offering property indexes based on three geographical zones in 2007. The price movements in the different segments reflect the market better than just an all-in-one index.
JOYCE TEO
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