Home prices seen rising further this year - 25 Apr 07
Dan
Building, financial services sectors to benefit as well
By UMA SHANKARI
THE Monetary Authority of Singapore (MAS) yesterday said home prices
are expected to continue to grow this year - after climbing 4.6 per
cent in the first quarter, the highest growth seen in seven years.
Strong foundation: The recovery of the construction sector continued
in early 2007, underpinned by ongoing work in the residential segment,
said the MAS
The gain, which has so far been greatest for the luxury market, could
also filter down to other mid to high-end segments which could benefit
from the steady stream of buyers who have sold their houses in en bloc
sales, Singapore's central bank said in its latest Macroeconomic
Review.
MAS expects the property upturn to spill over to the construction and
financial services sectors.
'Contracts awarded have trended up steadily from 2003 to reach $16.1
billion last year, a level not seen since 2000. This is expected to
translate into higher certified payments and value added for the
sector in the near term,' says MAS. 'Indeed, the recovery of the
construction sector continued in early 2007, underpinned by ongoing
work in the residential segment.'
A number of ongoing major projects including the Marina Bay Financial
and Business Centre, the integrated resorts and the downtown MRT
extension, are also expected to further fuel the recovery in the
construction sector.
The recent spike in raw material costs caused by disruptions to the
supply of sand has not resulted in delays in building projects, MAS
says. But the bank warns that in the future, new developments could be
slowed or delayed if sand and concrete become more difficult to
obtain.
The large number of upcoming new commercial developments should also
see more credit being extended to the building and construction
industry, MAS says. This is expected to benefit the financial services
sector.
And on the consumer loans front, while mortgage loan growth has
remained tepid in recent quarters, some upside could be seen in the
months ahead as the residential property uptick at the luxury end
begins to spread to the broader market.
MAS also says that the recent upswing in property prices will have
only a small impact on inflation this year. This is mainly because
substantial price increases in the near term should be largely
confined to the upper and middle segments of the private residential
market, MAS predicts.
'On balance, the impact of rising property prices on consumer price
index (CPI) inflation is likely to be modest, with the direct impact
contributing only 0.1 percentage point in 2007, compared with the
average of negative 0.2 percentage points over the past three years,'
says MAS.