URA index reflects overall price trends

August 15, 2008
LETTER TO THE EDITOR
URA index reflects overall price trends

WE refer to the letter 'URA private home index an anomaly' by Kenneth
Pang Cheow Jow (BT, Aug 5).

The writer asked why URA's Private Residential Property Price Index
(PPI) for second-quarter 2008 was still lower than its 1996 peak,
when private residential property prices in Singapore were
anecdotally at, or near, their highest.

We wish to inform your readers that the prices highlighted by Mr Pang
pertain to selected uncompleted properties which recorded relatively
higher prices. These were not representative of the entire private
residential market.

For example, in June 2008, a number of uncompleted properties in the
Core Central Region (CCR), where most high-end properties are
located, recorded median prices of around $1,300-1,800 psf and prices
as low as $1,100 psf. Similarly, a number of uncompleted properties
in the Rest of Central Region (RCR), generally equated with mid-range
properties, recorded median prices of around $800-1,300 psf and
prices as low as $700 psf. In the Outside Central Region (OCR), which
generally caters to the mass market, a number of uncompleted
properties saw median prices of around $700-800 psf, with some prices
as low as $600 psf.

Moreover, the anecdotes given by Mr Pang refer mainly to the prices
for new sales of non-landed properties. In contrast, URA's PPI takes
into account both primary and secondary market transactions of all
types of properties. Generally, the median prices of transactions in
the secondary market as a whole, which represent about 50-60 per cent
of all transactions, are lower than those found in the primary
market.

As for landed properties, the prices in Q2 2008 in several areas were
still lower than their peak in 1996. These include postal districts
14, 16, 17, 19, 21 and 28.

URA's PPI for private residential properties, both island-wide and
for the different market segments (that is, CCR, RCR and OCR), is
compiled based on both primary and secondary market transactions for
all types of properties. Hence the index gives a balanced picture of
overall price trends in the private housing market.

To compute the PPI, transactions are first grouped by characteristics
of the properties, including property type and locality, and the
median price in each group is used to compute a sub-index. A system
of weights based on the historical share of each group of the total
transactions is then applied to the various sub-indices to compute
the overall index.

We thank Mr Pang for his feedback.

Choy Chan Pong
Director
(Land Administration)
Urban Redevelopment Authority