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Jones Lang LaSalle’s Perspective: URA releases flash 4th quarter 2012 private residential property price index

Heightened policy risk following robust price increases in both URA and HDB flash estimates

​SINGAPORE, 2 January 2013 – The URA today released the flash estimate of the price index for private residential property for 4Q12. The overall residential property index rose from 208.2 points in 3Q12 to 211.9 points in 4Q12, representing an increase of 1.8% compared to a 0.6% increase the previous quarter. HDB’s flash estimate for 4Q12’s Resale Price Index (RPI) of 202.9 indicates a 2.5% increase over 3Q12’s value of 197.9. Following these flash estimates by the URA and HDB, Jones Lang LaSalle’s view is one of heightened policy risk in the residential market.

The price rise of 1.8% q-o-q island-wide, while not the strongest since the economic recovery from the Global Financial Crisis (GFC), has flown in the face of efforts by the government to cool the residential market. Post GFC, the index registered eight consecutive quarterly price increases of between 2.0% to 15.8% during the period of 3Q09 and 2Q11. By any measure, the recent increase is fairly tame compared to the earlier mentioned period, but robust when seen against the setting of what the government has done to cool the market and the poor economic environment of the local and global economy.

Not traditionally a month for strong price increases, the jump in both the island-wide and individual segments of the private residential and public resale market comes against the backdrop of tightened immigration measures, six concerted efforts by the government to cool the residential market and the poor state of the global economy. On face value, these factors, combined, should be more than adequate in capping house price increases to a minimum or below 1% every quarter. Indeed, q-o-q growth in island-wide prices measured by URA’s Property Price Index (PPI) has been on a downtrend from 2009 following the cooling measures imposed on the residential market. However QE3 and the assurance of sustained liquidity and low interest rates have kept demand for private homes steady and prices firm.

Figure 1: PPI ( All Excl. EC) Growth

Source: Jones Lang LaSalle

In the sub-markets, prices in the Outside Central Region (OCR) has risen the most at 3.4% q-o-q, followed by the Rest of Central Region (RCR) and Core Central Region (CCR) at 0.9% and 0.8% respectively. The firmer prices in OCR are in keeping with the keen buying interest in that sub-market and the higher sales volume relative to RCR and CCR. Going forward, we expect heightened policy measures with the government responding comprehensively to supress any price increases that rise beyond a level of about 2-4% p.a. 

Mr Ong Teck Hui, National Director, Research & Consultancy, Jones Lang LaSalle comments:
“The 1.8% increase in the residential property price index indicates a clear resurgence in prices, especially after several quarters of minimal price growth. A significant contributor to this is the strong price increase in OCR at 3.4% during the quarter. OCR prices are underpinned by a robust HDB resale market where firm resale prices help HDB owners to upgrade into mass market private homes. HDB resale price trend and that for OCR has been fairly similar; the former rising 6.6% in 2012 and the latter, 6.1%. On the other hand, 2012 price increases for RCR and CCR were only 1.6% and 0.9% respectively.

The 3.4% increase in OCR prices in 4Q12 is also due to a much higher proportion of higher value transactions occurring during the period compared to the third quarter. In 3Q12, of the 4096 caveats lodged in OCR, only 33% were for transactions of above $11,000 psm while in the fourth quarter, 52% of the 3714 caveats lodged (to-date) were of that price category. Projects with considerable sales volume in 4Q12 and with average prices above $1000 psf contributing to the quarter’s upbeat pricing in OCR include eCO ($1306 psf), Foresque Residences ($1152 psf), Kovan Regency ($1283 psf), Skies Miltonia ($1057 psf), The Luxurie ($1086 psf) and Parc Centros ($1095 psf)

It’s been barely 3 months since the last round of cooling measures and we are now faced with another challenging situation which could result in policy intervention again. It’s an extremely tricky situation if additional measures are imposed while economic conditions are deteriorating. The cumulative effect of cooling measures could exacerbate a property downturn in an adverse economic environment. 

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Notes to editors
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47.2 billion of assets under management.

Jones Lang LaSalle has over 50 years of experience in Asia Pacific, with over 22,200 employees operating in 79 offices in 14 countries across the region. The firm was named ‘Best Property Consultancy’ in nine Asia Pacific countries at the International Property Awards Asia Pacific 2012, in association with HSBC, and was highly commended in a further three countries. For further information, please visit
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