Private property prices smash previous all-time record

NewsJuly 23, 2010

Private property prices set an all-time high in 2Q10 with a 5.3% increase in the price index to 184.1, smashing the previous record of 181.4 in 2Q96.

PropNex CEO Mr Mohamed Ismail notes that despite the smaller increase Q-on-Q and the expected slower growth for 2H10, the private property price index will easily exceed the 190 mark by the end of 2010.

Upon closer observation of the main geographical areas, however, the growth for 2Q10 was strongest for properties in the Outside Central Region, which registered a 5.7% increase; the Core Central and Rest of Central Regions registered increases of 5.4% and 4.6% respectively. Coupled with a lower landed property growth of 6.2%, down from an 8.3% growth in 1Q10, indicates that the private property market is stabilizing with a slight dip in the number of investors. This was supported by the fact that the number of private residential sale transactions in 2Q10 dipped by 8.7% from 1Q10.

“The shift in focus to the mass market, as well as the overall slower growth can be attributed in part to the European sovereign debt crisis which hit Greece in 1Q10 and subsequently impacted the rest of Europe and the world,” explains Mr Ismail. “This economic uncertainty and the rising prices of private property have led to the steadily declining number of private residential units sold in the last two months of 2Q10.

He further reveals that while 71.6% of the private property transactions in 1Q10 were at a median sale price of $1,000psf or more, this dropped to only 47.6% in 2Q10. “Investor confidence has definitely been affected by the shaky global economy,” opines Mr Ismail.

“For example,” he elaborates, “the top three selling projects in June 2010, which altogether accounted for 40% of that month’s sales, all had a median sale price of below $1,000psf.”

Mr Ismail expects private property prices to further stabilize and grow by another 3–5% per quarter for the rest of 2010.

END

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