Home prices fall for five quarters claim is true

By Andrew Batt:Claims published last week which suggested that private home prices in Singapore have fallen for five consecutive quarters, once adjusted for inflation, were questioned by a large number of PropertyGuru readers.

In a report published on Wednesday by The Global Property Guide and subsequently republished around the world and on Propertyguru.com.sg ('Asian property markets show signs of weakness'), a claim was made that private home prices in Singapore, once adjusted for inflation, have fallen for five consecutive quarters.

A large number of readers made contact to question the validity of this assertion that home prices have fallen, given the plethora of stories which appear on an almost daily basis which seem to contradict this claim.

When contacted for further comment, the publisher of The Global Property Guide Matthew Monatgu-Pollock, told PropertyGuru that he stands by the claims made by his company. He also revealed the data his company used to establish the claim.

             The Global Property Guide said: "Using property price data from the Urban Redevelopment Authority (URA) and data for consumer price index (CPI) from Statistics Singapore, we computed the inflation-adjusted property price index (4th column) using the following equation:Real property price in quarter t = (Nominal property pricet /CPIt) x 100

In the table above, property prices rose by 0.6 percent (in nominal terms) during the latest quarter. But when adjusted for inflation, property prices actually dropped by 0.3 percent, the country's fifth consecutive quarter-on-quarter house price decline."

We can also look at it in another way, they said.

             "Listed above are the property price index (all residential) and the CPI for Singapore from the first quarter of 2011 to the third quarter of 2013.

As we can see, the quarterly change for the CPI has been greater than the quarterly change for the residential price index in the past five quarters. And, anyone can already guess (even without computing further) that if we adjust the property price index to account for inflation, quarter-on-quarter property price changes would be negative from Q3 2011 to Q3 2012." Andrew Batt, International Group Editor of PropertyGuru, wrote this story. To contact him about this or other stories email andrew@allproperty.com.sg Related Stories:Rental market strong, but more vacant units

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