Private home prices looks to have rebounded in the third quarter, after almost four years in decline.
Prices have rose 0.7 percent in three months to September 30, compared with the recent quarter. This is higher than the estimates of a 0.5 percent rise and ended 15 quarters of decline, according to Urban Redevelopment Authority (URA).
URA said that the recent flurry of collective sales could deliver an additional 9,300 units to the market, a first time it has put an estimated number to the number of units likely to be yield from the collective sales.
Together with the further 7,400 units which could be developed from government land sales in the next few years, the yield from collective sales could double the number of unsold private houses in the pipeline, assuming planning approval is obtained. 17,178 units have already received approval.
En-bloc sales of existing sites have been active for the past one to two years and will add a significant number of housing units to the existing supply pipeline. URA said in a report which accompanied the quarterly figures.
However, the impact of collective sales is unlikely to be felt soon. The potential new homes are likely to hit the market in the next one to two years and will be ready for moving in from 2021 onwards.
URA is closely monitoring the situation, especially for collective sales with tweaking the supply for the government land sales in mind. Developers are also cautious not to over-cannibalise each other.
The price recovery of private home prices is up 0.3 percent, against a 2.6 percent decrease in the same period last year.
The values for both landed properties and apartments across the island is broadbased, supporting the likelihood of prices rising in the next few quarters.
Prices in the private residential market tends to be slower in the third quarter due to the Chinese Seventh Month. The uptick in prices suggests that the market has bottomed out.
The market might be finally turning after stabilising over the last four years and the prices are not likely to shoot up and the market recovery is expected to be gradual.
The cooling measures such as the total debt servicing ratio and additional buyer’s stamp duty will moderate the prices of price increase.
The rise in home values is likely to be driven by the inflation in land prices rather than an exuberance in demand.