City centre home prices left trailing behind expensive suburban properties

(City centre apartments outdone by those on the fringes. Image courtesy of Thinkstock.)

A survey by Square Foot Research revealed that non-landed suburban private homes have outperformed those in the city over the last five years. The research also showed that, across the board, private home prices have soared more than 50 per cent.

At the other end of the spectrum, city centre homes have fared the worst, with many struggling to match robust gains posted by homes on the city fringe and in suburban areas.

The property research firm also compared the change in prices between the first quarter of 2007 and the first quarter of 2012. The results showed that prices of non-landed homes in suburban areas experienced price rises of 68 per cent on average. This is 30 per cent more than city centre home price rises, which gained 38 per cent on average.

Driving the point home further, the top five price performers in the period were all suburban projects. At the bottom, five were high-end homes mostly in the prime districts of 9, 10 and 11.

Price drop per square foot

St Regis Residences in Tanglin Road, for instance, registered a 16 per cent drop in value in the last five years. The average selling price in the first three months of 2007 was $2,671 per sq ft (psf), but units were languishing at an average of $2,237 psf five years later.

Meanwhile, Sherwood Tower in Bukit Timah Plaza led the pack in terms of gains, posting a staggering 175 per cent jump in average prices, from $258 psf to $709 psf.

However, if a different period had been selected, the trend noted by Square Foot Research may have been reversed, with non-landed city centre homes posting some of the strongest price rises instead.

For example, these homes enjoyed solid price gains of about 69 per cent in the three-year period from the first quarter of 2005 to the first quarter of 2008. Prices among city fringe homes jumped 39 per cent while suburban homes trailed with a 38 per cent rise in the same period.

International Property Advisor chief executive Ku Swee Yong also noted that the collective sale market for high-end developments boomed in 2007, lifting city centre prices then while the suburban market was still quiet.

SLP International research head Nicholas Mak also observed a lot of hype when projects like St Regis and One Shenton launched in 2006 and 2007, which could explain their higher pricing then.

“But fortunes can be reversed,” he told The Straits Times.

“There was a time when it would be unimaginable for high-end properties to be the worst performers. We might just come to another stage in five to seven years when it becomes the time of the high-end market again. Mass-market homes, which have seen their prices run up by too much in the past few years, might see their prices stall instead,” he added.

“Supply in the high-end segment is limited. The subdued en-bloc market helps limit the supply to just what it is today. The mass market, on the other hand, is being inflated with new supply from the Government Land Sales programme.”