URA revised Property Price index: price fell by 1.1% #katonghomes

The Urban Redevelopment Authority (URA) has revised its Property Price Index (PPI) to better capture price trends in Singapore’s private housing market. The revised index was first adopted for the year’s first-quarter flash estimates, which were also released on Wednesday (Apr 1).

Using the revised methodology for the PPI, the overall private residential property index fell by 1.1 per cent – the sixth continuous quarter of price decrease.

Prices of non-landed private residential properties declined in all market segments, as they did in the previous quarter. Prices fell 0.6 per cent in Core Central Region (CCR), 1.8 per cent in Rest of Central Region (RCR), and 0.9 per cent in Outside Central Region (OCR).

Prices of landed properties fell 1.1 per cent.


In a statement issued on Wednesday, URA said the revision aims to better reflect current market trends, since the index was last reviewed 15 years ago in 2000.

The process took about a year, and comes four months after the Housing and Development Board (HDB) revised its public housing Resale Price Index (RPI) to a similar methodology.

Previously, the property price index was calculated using transactions which are grouped according to property type, tenure, completion status and region. The median prices for each category were then computed, using 12-quarter moving average weights, to derive the price index.

However, URA said the method does not fully differentiate between a large apartment and a shoebox unit, or between new and old houses. So when more lower-priced shoebox units are sold in a particular quarter, for example, overall prices may appear to have fallen.

With the revised index, more property attributes, such as proximity to the MRT, size and age of the property, will be considered. And when these attributes are removed, the index will show only how prices of properties move over time.


Associate Professor Lum Sau Kim of the Department of Real Estate at the National University of Singapore (NUS) was involved in the review of both the PPI and HDB’s RPI.

She said: “This new way of doing it is very finely tuned to variations like age, where it is located or how close it is, for example, to the MRT. So it is able to capture very fine differences that might suggest that the variations in prices are due to these factors rather than, say, movement in time.

“By having finer quality controls, we are able to strip out differences and have a more apple-to-apple comparison amongst varying housing units,” the associate professor added.

According to URA, back-testing of the PPI with the new method did not show any changes in the broad trend of price movements. Prices in the last four quarters fell by 1.2 per cent, 1.1 per cent, 0.7 per cent and 1.1 per cent using the old methodology. With the revised index, prices fell by 0.7 per cent, 1 per cent, 0.8 per cent and 0.8 per cent.

The agency said the new calculation method is also being used in other countries such as Japan, Finland and France. Others such as Australia, South Korea and the UK are also exploring the use of such indices, it added.

With the revised index, URA will only publish the following five sub-indices – PPI of landed, non-landed homes, and PPI of non-landed homes in the city area, city fringe and suburbs. URA said this is in line with the PPI’s intention to show broad price trends rather than detailed property price movements.

However, the public will still be able to access detailed price information in specific projects or locations on the URA website.

In addition to the change in methodology, URA has also included more data sources – stamp duty from the Inland Revenue Authority – in computing the index.

Previously, the index was calculated using data from caveats lodged with the Singapore Land Authority, and survey of developers. But it is not mandatory to lodge these caveats, which are legal documents submitted by purchasers after the Option-to Purchase is exercised or the Sales and Purchase agreement is signed.

Mr Eugene Lim, key executive officer at ERA, said buyers are showing signs of being more conservative when making offers, while sellers are holding out for “as long as they can”.

“Currently, majority are not under pressure yet, even though there are hints of an increase in interest rates. It is still taken in stride; most of it can be handled,” he said.


As for how the revised index will affect the general public, Mr Lim says ordinary buyers and sellers will still refer more to recent transacted data, when setting pricing or making offers.

Said Mr Lim: “The index is to give a direction. So for example, prices are now trending downwards. So when I am making an offer, it will tell me to be more conservative rather than to be more aggressive. And to justify what price level to actually offer, I will be looking at price levels transacted in that area itself.”

“For example, the general price level seem to be on a downward trend,” said Mr Lim.

“But if you look at very niche kind of property, for example, the good class bungalows, prices of good class bungalows are actually on an up-trend,” he added.

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