Official figures confirmed yesterday what many tenants and buyers have known for months - rents and real estate prices are going through the roof.

Official figures confirmed yesterday what many tenants and buyers have known for months - rents and real estate prices are going through the roof.

Soaring demand for residential and commercial space and a boom in high-end home sales have given the property sector its best quarter for years.

Landlords, in particular, are now calling the shots after several tough years.

Residential rents across the board rose 7.6 per cent in the first quarter after having jumped 5.3 per cent in the last three months of 2006.

Flats led the way, with rents rising 8.1 per cent, up from the 5.8 per cent in the previous quarter, said an Urban Redevelopment Authority (URA) quarterly report.

It is all down to a classic supply-demand squeeze. The rash of collective sales is taking thousands of rental flats off the market, yet the number of tenants - local and foreign - chasing quality property has increased with the robust economy.

While rents are about 29 per cent below the 1996 peak, overall rental growth in the first quarter has exceeded price growth.

And landlords will have the whip hand for a while yet, with some experts projecting that residential rents will rise as much as 25 per cent this year.

CB Richard Ellis sees ongoing collective sales keeping supply tight. CBRE Research executive director Li Hiaw Ho agreed, saying the en bloc frenzy has swung the rental market in favour of landlords.

The en bloc activity is having another flow-on effect - displaced owners of estates sold collectively are chasing new homes in outer areas and helping push up prices.

‘The collective sales in the central region are raising the number of homeowners looking for replacement units,’ said Colliers International’s Ms Tay Huey Ying.

Many are forced by the runaway prices in the central areas to look elsewhere, which partly explains the robust price rises in the URA figures, including those in once lacklustre areas, she said.

Led by prime, high-end launches, private residential property prices surged 4.8 per cent across the board, following a 3.8 per cent rise in the previous quarter, and are now near their 2000 peak.

Favourable gains were seen even in non-central areas, but overall, prices across the board remain about 25 per cent below the 1996 peak.

HDB resale prices rose 1.25 per cent, but sales volume was down to 6,258 units, the lowest since early 2004.

ERA Singapore said the dip is temporary, and resale prices should rise about 2 to 4 per cent this year.

Private residential prices in the first quarter were led by new apartment launches in the core central region, including hotspots such as Orchard Road, where records were smashed by eager buyers.

Prices in this region - districts 9, 10 and 11, the downtown core and Sentosa - rose 7.3 per cent, exceeding the 7 per cent rise in the whole of 2005. Prices rose 25.4 per cent in 2006.

In the quarter, 2,259 units of uncompleted private homes in the central region were launched - an ‘unprecedented’ number, said Chesterton International’s head of research and consultancy, Mr Colin Tan.

Demand was equally strong, with 2,055 units snapped up in the quarter.

‘Whether it is misplaced or not, the demand reflects buyers’ tremendous confidence in the market,’ said Mr Tan.

Yesterday’s figures also confirmed the boom in commercial space, with office rents rocketing 10.4 per cent.

Source: The Straits Times, 28 April 2007