Singapore property prices may continue climbing this year, contrary to a widely expected downturn, according to results of a survey by online portal PropertyGuru.com.sg.

Most respondents said property in Singapore will remain expensive, and they are setting their sights on alternatives like commercial property and real estate investments overseas, the survey showed.

Rising property prices are pushing would-be home buyers to hold off their plans as they do not believe that the much-anticipated downturn will materialise this year.

Steve Melhuish, CEO and co-founder of PropertyGuru.com.sg, said the survey itself would not have an impact on the market. However, it is like a temperature check.

He said: “(What it says is that) they expect the transactions and prices to carry on going up and so the expectation is that they are going to have to pay a higher price in the future. And as a result of that, they want the government to do more.”

Analysts said prices for government-subsidised housing, or HDB flats, could jump 12 per cent this year, while private homes might climb as much as 10 per cent.

Adam Tan, corporate communications manager, PropNex, said: “I think we can see from the survey that there are people who are unhappy and they would like the prices to come down. And that is reflective of the market, prices are indeed increasing and don’t look to drop any further.”

This year, HDB resale prices have risen around 3 per cent, while private home prices were up about 2 per cent.

Buyers are now setting their sights on commercial properties – where the rental returns are more attractive – and overseas properties, with Malaysia, India and Australia the top choices.

Tom O’Reilly, director of Singapore Tenancy Management, said: “Malaysia as a country has extremely strong fundamentals and the property market in Malaysia tends to be a lot less volatile than Singapore.

“For the same amount of money, people can often afford to invest in multiple properties in Malaysia, which help them diversify risk but also still generate a positive return.”

However, a downward correction for Singapore property prices may still lie ahead.

Analysts such as Bank of America Merrill Lynch are underweighting residential properties on potential oversupply between now and 2015.

It is favouring commercial property stocks like UOL and OUE, and real estate investment trusts like CapitaMall Trust, Starhill and ARA.

SIAS Research also sees positive prospects for commercial REITs on expected rental and values growth in the next few years.

Its top pick is K-REIT for its prime Grade A commercial properties such as Marina Bay Financial Centre and One Raffles Quay.

While Grade A office rentals have increased, analysts say it is still 36 per cent off its peak levels in 2008.

Source : Channel NewsAsia – 1 Aug 2011