Developers cautiously have started to release new projects again after a very quiet first half year? 3,000 people turned up for City Development Limited's (CDL) Livia launch in July, with 160 of the available 200 units snapped up on the spot! City Development Limited's share price rose by 5% on the back of the strong launch results. Analysts expect the new property launches to continue now, albeit on a smaller scale than in 2007.



There are positive signs for a stablising . With unemployment rates close to 2%, Singapore is essentially at full employment. The opening of the first of the two integrated resorts next year is expected to also create thousands of additional jobs. In addition, as Singapore continues to wealthy people and money from across Asia, the Middle East and Russia, the local financial industry headcount may hold. In a recent announcement to the Singapore stock exchange, CapitaLand forecasted that home prices would increase by 5 to 10% over the year.

To support CapitaLand's forecasts, new home sales rose for the third month in a row last month. According to latest figures released by the Urban Redevelopment Authority (URA), buyers acquired 900 new private homes last month, 12 per cent more than in June, which in turn was almost double the May figure.

Rental prices for private residential homes continued to increase during Q2 by 2.5%, but shows signs of weakening when compared with 6.0% increase for the previous quarter.

The 12-month interbank interest rate, which is the benchmark for mortgages at some of the city's banks, is currently 1.69%. This will be low enough to spur some renters to turn to buyers. There may well be some interesting purchase opportunities as some of the 2007 speculators may not be able to obtain bank financing for their 2008 completed properties and may have to sell below-market prices.

It is not all good news though for the . Singapore's inflation will start to have an impact on investors who may not want, or be able, to hold on to their properties due to low average rental yields of 2.3%, versus high inflation rate of 7.5%. In addition, rental yields may reduce further if the number of foreign workers slows. Multi-national enterprises are expected to be increasingly cautious about hiring expats given the global economic uncertainties.

The stalemate between developers and buyers remains?Developers are still cautious about launching too many units and buyers aren't yet willing to participate aggressively as they expect prices to stabilise. Big developers including CapitaLand, City Developments, Ho Bee, Keppel Land, UOL and Wheelock Properties all posted lower profits for Q2, although luxury developer SC Global defied this trend with a 117% increase in net profits.

New homes sales were 35% down in July on the previous year, according to the Urban Redevelopment Authority (URA). The high-end segment in particular showed continued weakness with no units priced S$4,000 per square foot or more being sold. The highest sale price in July was S$3,676 per square foot for a unit in The Hamilton Scotts. Despite this, top end prices are unlikely to reduce any time soon as the majority of developers in this top segment are in healthy financial positions and can afford to wait.

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