Real News‎ > ‎2015‎ > ‎January 2015‎ > ‎

1st January 2015

Singapore Economy

Economy grew 2.8% in 2014: PM Lee

But productivity fell 0.5 per cent in first nine months; country needs 'productivity-driven growth'

Source: Business Times / Government & Economy

SINGAPORE'S economy performed "moderately well" in 2014 to grow 2.8 per cent, but the showing was dimmed by a "disappointing" minus 0.5 per cent productivity growth in the first nine months of the year.

Disclosing these numbers in his traditional New Year Message on Wednesday, Prime Minister Lee Hsien Loong said Singapore must redouble its efforts to help companies and workers upgrade and become more productive.

"We must do better (in productivity growth)," he said. "Otherwise, our incomes cannot continue to rise, and will soon stagnate."

Mr Lee noted, however, that for 2014, real median incomes continued to rise, leading to a 10 per cent jump over the last five years. "Unlike many developed countries, we are not facing unemployment and stagnant wages," he added. "We can take heart from this."

Private-sector economists contacted by The Business Times were unsurprised by the year-on-year economic growth figure, as it is not far from the official forecast of 3.0 per cent. And while it was below 2013's 4.1 per cent growth, last year's economic growth was still higher than the 1.9 per cent posted in 2012.

The Ministry of Trade and Industry (MTI) will unveil the details of Singapore's 2014 economic performance on Friday.

In its last statement in November, MTI said the economy grew 3.3 per cent in the first nine months of the year, but that growth was tipped to taper for the remaining months of 2014. Expecting global growth to pick up modestly, MTI said it projected the Singapore economy to grow 2 to 4 per cent in 2015.

Private-sector economists such as DBS Bank's Irving Seah are looking at a "more volatile picture" in the year ahead, but still foresee the local economy growing 3.2 per cent; overall, private-sector economists expect the Singapore economy to grow 3.1 per cent, supported by a firm US recovery, said CIMB's Song Seng Wun.

In his New Year Message, Mr Lee lamented that productivity growth had been weak for the third year in a row. But even when that picks up, he said Singapore's economy will grow slower than it used to.

"One reason for this is that we have been tightening policies, including those on foreign workers, to get our economy onto a path of sustainable, productivity-driven growth," he said.

He stressed that economic growth remained important.

"Those who say that it is unimportant are gravely mistaken," he said. "Growth is not the be-all and end-all, but it is the only way for us to create good jobs for all and earn a good living, so that as a nation, we can invest in our people and our future."

Growth also provides the resources to improve social well-being and sustain social safety nets - and this has been a major priority for the government as it makes fundamental shifts to prepare for the future.

"These shifts will give Singaporeans at each stage of life greater assurance, more opportunities and a better home."

The Pioneer Generation Package and the MediShield Life, which comes into effect this year, are examples of government initiatives introduced to give Singaporeans greater assurance.

They "will help make Singapore a more fair and just society, where risks are shared and the vulnerable among us receive more help".

To create more opportunities so that all can achieve their aspirations, he said, the government will continue to invest heavily in early-childhood education, making every school a good school and building a strong and diverse tertiary system through ITEs, polytechnics and universities.

And to build a better home for all Singaporeans, Mr Lee noted that 28,000 families collected their keys to new HDB flats last year; 26,000 more will do so this year.

"Five hundred more buses are already plying our roads, with more to come. In the coming years, we will see new MRT lines, more trains and more frequent train services, especially at peak hours. In our urban environment, we are creating special places in every corner of Singapore, from the Jurong Lake District to Mandai."

-By Chuang Peck Ming

Economy grew by 2.8% for 2014, but just 1.5% in Q4: MTI advance estimates

The quarterly figure is down from the 2.8 per cent growth in Q3, dragged down by the manufacturing sector, said the Ministry of Trade and Industry.

Source: Channel News Asia / Singapore

SINGAPORE: The Singapore economy grew by 1.5 per cent on a year-on-year basis in the fourth quarter of 2014, based on advance estimates, the Ministry of Trade and Industry said on Friday (Jan 2).

This is down from the 2.8 per cent on-year growth registed in the third quarter. On a quarter-by-quarter seasonally-adjusted annualised basis, the economy expanded by 1.6 per cent, slower than the 3.1 per cent expansion in the previous quarter, the MTI said.

For the full year, the economy is estimated to have grown by 2.8 per cent, it said - in line with the ministry's forecast of around 3 per cent.

While the construction and service-producing sectors faired well in the fourth quarter - registering 0.8 and 2.6 per cent year-on-year growth, respectively - the manufacturing sector contracted by 2 per cent in the same period, a reversal of the 1.7 per cent expansion seen in the previous quarter.  On a quarterly basis, manufacturing contracted by 5.8 per cent, the MTI said.

Growth in the construction sector was supported "mainly by public sector construction activities", while the services-producing industries were bolstered primarily by the finance and insurance and business services sectors, the ministry said.

MTI will release the preliminary GDP estimates for the fourth quarter and the whole of 2014 in its Economic Survey of Singapore in February 2015.

- CNA/es

Singapore Real Estate

Singapore prime office rent forecast to rise 5-7% in 2015: Knight Frank

Grade A plus offices in the Raffles Place and Marina Bay area now command rents of S$10.70 to S$13.40 per square foot each month, notes the real estate consultancy.

Source: Channel News Asia / Business

SINGAPORE: Prime office rent in the Republic is expected to rise by 5 to 7 per cent in 2015, helped by the lack of new office space in the next two years, real estate services firm Knight Frank said on Wednesday (Dec 31).

Knight Frank said that while more firms in the technology, media and internet sectors are looking to relocate to prime office spaces, the amount of new office space coming onto the market next year is likely to fall to around 1.15 million square feet, down from 1.87 million square feet in 2014.

The estimated supply for 2016 is 1.60 million square feet, while 2017 will see the main bulk of new office supply of about 4.69 million square feet. 

In view of the large upcoming supply of office space in 2017, landlords are asking for longer five- to six-year lease agreements instead of the traditional three-year lease for office space, Knight Frank said.

Knight Frank said Grade A plus offices in the Raffles Place and Marina Bay area now command rents of S$10.70 to S$13.40 per square foot per month - an increase of 6.9 per cent from a year ago.

In the Orchard Road area, office rents are currently between S$7.50 and S$10.50, a rise of 1.5 per cent from a year ago, while the going rate for offices at City Hall, Marina Centre and Suntec area is S$9.50 to S$11.30 - up just 0.9 per cent year-on-year.

As a result of the rising differential, new developments on the fringes of the central business district (CBD) have attracted interest from various tenants "due to the lower rents compared to core CBD, high quality building specifications with vantage views, less traffic congestion and more available space choices in these precincts", Knight Frank said.

- CNA/ek

Resale flat prices likely to fall further

Source: Straits Times / Singapore

AFTER a sluggish year in the public housing resale market, prices are expected to continue their slow slide into 2015.

But the number of deals closed might pick up, as buyers are lured back by low prices.

Experts' predictions range from stagnation to a fall of 5 per cent to 8 per cent for the full year, though this depends on whether cooling measures are lifted. So far, the Government has stuck to its position that it is not yet time to do so.

Larger forces such as the country's and global economic growth as well as interest rates could also weigh down on prices. Lower prices could be good for buyers but would erode home owners' wealth.

Buyers' return to the resale market might also be encouraged by a smaller supply of new flats.

About 16,000 Build-to-Order units will be launched in four batches, including the first housing projects at Bidadari.

On the policy front, National Development Minister Khaw Boon Wan has said he will continue finding ways to help couples live near their parents. He added that with the backlog of demand from first-timer families having been cleared, there will be a greater focus on singles and families who do not yet own a flat and are renting.

For current flat owners, changes to the Lease Buyback Scheme will kick in on April 1. Elderly flat owners will have more flexibility over how many years of their lease to sell back to the Government. Four-room flats will also become eligible.

-By Janice Heng

6 in 10 owners still live in their first HDB flat: Khaw

Among the 26 Housing and Development Board (HDB) towns and estates, the Tanjong Pagar/Chinatown/Bugis area had the highest percentage of residents still living in their first flat, the National Development Minister Khaw Boon Wan reveals.

Source: Channel News Asia / Singapore

SINGAPORE: Six in 10 existing owners of 900,000 Housing and Development Board (HDB) flats in Singapore continue to live in their first flat, which is "remarkably high", said National Development Minister Khaw Boon Wan in a blogpost on Wednesday (Dec 31).

Of the 26 HDB towns and estates, Tanjong Pagar/Chinatown/Bugis had the highest percentage of owners still living in their first flat, at 77 per cent. Other high scorers include Marine Parade (74 per cent), Kallang/Whampoa (68 per cent) and Bukit Timah/Geylang (67 per cent), Mr Khaw wrote.

"Not surprisingly, the attractions of (central) location and comprehensive facilities make most owners living in mature estates decide to stay put," he said.

The minister added that for most Singaporeans, the first flat is also their first home, and that "occupies a special place" in their hearts as it is where they built their families, brought up their children and have their network of neighbours and close friends.

"In Singapore, we are unique because of HDB and its highly successful 'Home Ownership for the People Scheme' which entered its 50th anniversary this year. Home owners, unlike tenants, largely stay put in one place," Mr Khaw wrote. "The stability allows us to build deep community ties and lasting friendship and memories."

With the knowledge that the majority of Singaporeans will want to live in their first HDB flat for most, if not all, of their lives, Mr Khaw said the ministry will "put in our best" to make all HDB towns "endearing" and all flats a "lovely home".

"This is our promise. This is our pledge," he wrote.

- CNA/kk

Columbarium in Sengkang 'will be out of public view'

MP assures would-be residents of project near temple

Source: Straits Times / Singapore

THE planned columbarium in Fernvale Link, which has upset some residents, will be out of the public's view and will take up, at most, only a fifth of the Chinese temple it will be housed at.

This was the assurance Dr Lam Pin Min, the MP for Sengkang West, gave yesterday in a lengthy Facebook post in which he said he understood the concerns of residents.

A dialogue between residents and Life Corp, which is developing the temple, the Housing Board and Urban Redevelopment Authority (URA) will be held on Sunday morning at the Anchorvale Community Centre, he revealed.

An online petition started on Tuesday to stop the development of the columbarium had garnered more than 600 signatures by yesterday evening.

The temple, which is set to be completed next year, will be located next to Fernvale Lea, a Build-to-Order (BTO) project which is expected to be ready for occupation later this year.

Dr Lam, who is also the Minister of State for Health, wrote yesterday that he had received plenty of feedback on the issue. He said he had met Life Corp, which is the parent company of Singapore Funeral Services, the URA and HDB.

"I have been reassured by the developer that there will not be crematorium or funeral parlour services at the new temple," he said.

Instead, the modern-looking temple will be the first in Singapore to have an automated columbarium; the niches will be kept hidden and there are private viewing booths.

There will be other features to reduce noise and parking issues.

Dr Lam wrote: "Visitation times will be done through e-booking to minimise crowds... Worship and services will be conducted indoor in air-conditioned halls to minimise noise. To protect the environment, there will not be open burning of incense and offerings at the temple.

"In addition, there will be provision of free parking spaces on the temple premises."

He also explained that having columbarium services at places of worship is not uncommon. Similar setups can be found at the Puat Jit Buddhist Temple in Anchorvale and the Church of St Francis Xavier in Serangoon Gardens, wrote Dr Lam.

He noted that the plot of land in Fernvale has been designated as a reserve site for a Chinese temple in the URA masterplan and that this is reflected in the brochure for the Fernvale Lea BTO development. It is also indicated in the brochure that the proposed facility may include a columbarium allowed under URA's guidelines.

Mr Simon Hoo, chief executive of Life Corp, told The Straits Times that the development "will be 80 per cent temple and 20 per cent columbarium".

"The columbarium will be out of sight and out of mind. It will be inside the temple building. It will also be a modern temple with a zen feel to it, and not the traditional dragon-and-phoenix type of temple."

According to URA guidelines, approved temples are allowed to set aside some space within their buildings for columbarium use, but this must not exceed 20 per cent of the total gross floor area of the building.

The HDB and URA said in a joint statement: "To protect the amenity of the adjoining developments, the columbarium area must also be located inside the main building, out of sight of the surrounding developments, preferably in the basement. If it is located above ground, it should be screened from public view."

The petition against the columbarium has also attracted more than 140 comments, with those responding describing their unease about living near the dead, or their worries about possible noise.

Others were annoyed that the possibility of a columbarium at the site of the temple was in fine print in the BTO development booklet.

Product manager Karthik Asok, 28, said that while Dr Lam's post helped clear up some of the confusion about the development, more information should have been given to residents. He applied for a flat at Fernvale Lea in 2012 and is due to move in later this year.

"The authorities should have been more transparent, more black and white, with what they were going to do with the site so the residents know what's happening," he said.

Systems engineering technician Asif Mustaza, 25, who is also moving in this year, said he did not mind that a columbarium is being planned.

"For me, it doesn't matter. What's the worst that can happen? But I can see where my neighbours are coming from. Most of them applying are young adults like me, who are worried about the resale value of their flat."

-By Lestor Hio

Soilbuild bags S$128m HDB building contract

Source: Business Times / Companies & Markets

Soilbuild Construction Group has been awarded a S$128 million contract by the Housing Development Board (HDB) for the building works at a Sembawang neighbourhood. Under the contract, Soilbuild will construct six blocks of 16 to 17-storey residential buildings with multi-storey car parks, commer-cial/community facilities, precinct pavilions and park. The construction period will be approximately 36 months.

Second Chance Q1 profit drops 56% to S$1.7m

Source: Business Times / Companies & Markets

Second Chance Properties' net profit for the three months ended Nov 30, 2014 - its fiscal first quarter for FY2015 - plunged 55.8 per cent to S$1.7 million from a year ago. Revenues over the same period fell 4 per cent to S$8.84 million. Earnings per share stood at 0.25 Singapore cent, while net asset value per share was 38.73 cents. No dividend was declared for the quarter.

Schroder, Lloyd's Asia, Twitter sign up at CapitaGreen

Ace Insurance has also signed up for about two floors or 38,000 sq ft. South Beach Tower secures Lukoil

Source: Business Times / Real Estate

More names of tenants signed up at CapitaGreen and South Beach Tower, the two newest office towers in town, have been emerging from leasing agents this week. At CapitaGreen, which received Temporary Occupation Permit (TOP) on Dec 18, Lloyd's Asia has leased about 75,000 sq ft.

-By Kalpana Rashiwala

Chairman of Harilela group dies

Source: Business Times / Real Estate

Hotel tycoon Hari Harilela of the Hong Kong-based Harilela Group died on Monday at the age of 92. For 67 years, he was the chairman of the group which owns and operates 19 hotels round the world, including the Holiday Inn Singapore Orchard City Centre here, and transit hotels in all three terminals at Changi Airport.

Views, Reviews & Forum

Unfair penalty in BTO application process

Source: Today Online / Voices

Each Build-to-Order (BTO) exercise has several housing projects, and two are usually paired for each application. Buyers would usually favour one project, but may have to accept the other one depending on their queue number.

If we do not accept the other project, we are penalised one turn in the application process. I experienced this after not going ahead with a selection when the project of my choice was taken up fully.

And my queue number was higher than the number of units available for both projects. It would have been better if the Housing and Development Board (HDB) had not given me a number in the first place.

It is unfair to put two projects together and penalise applicants who do not want the second project. The HDB should instead try to attract buyers to a less favoured project through other means, such as pricing.

-By Ramesh Kumar

Global Economy & Global Real Estate

Farewell to 'golden era' of China's property sector

Market slowdown heralds end to Chinese's obsession with home ownership

Source: Business Times / Real Estate

China to better handle property in crime cases

Source: Business Times / Real Estate

US home prices rising at slower rate

At the same time, more cities starting to show reacceleration, with prices set to rise faster in 2015

Source: Business Times / Real Estate

Ying Li puts $120m into Beijing project

Source: Straits Times / Money

CHINA developer Ying Li International Real Estate and China Everbright have teamed up to invest in a mixed-use development project in Beijing's Tongzhou District.

Ying Li will invest 559 million yuan (S$120 million) in the project. Together with China Everbright and other joint investors, the total amount invested will come up to 7.2 billion yuan.

Ying Li's investment will be funded by the proceeds from the convertible bond issue and share placement to China Everbright.

Currently, the project is in its initial stage and is expected to commence pre-sales in 2015.

Located in the south-east of Beijing, Tongzhou District is considered the eastern gateway to China's capital city. The investment marks Ying Li's maiden foray beyond its conventional Chongqing market into first-tier cities.

The Beijing Tongzhou Project is located in the secondary Central Business District (CBD) of Beijing, and is 18km and 16km respectively from Beijing's main CBD and the Beijing Capital International Airport.

The Beijing Tongzhou Project has been incorporated in the government's 12th five-year plan.

The Tongzhou New City Canal Core Area will also be home to the Universal Studios movie theme park, Renmin University of China, and an international health care and wellness city.

As the site is situated at a key interchange, the project will be the first in Beijing to combine the mass rapid transit, round island underground tunnel, and underground retail in one location.

This landmark project consists of super high-rise residential units, office buildings and retail malls with an aggregate gross floor area of some 750,000 sq m.

Ying Li shares yesterday ended unchanged at 24.5 cents.

Vineyards: rich Chinese's new love

Source: Business Times / Real Estate

Indian Land-Acquisition Rules Eased by Modi Executive Order

Source: Bloomberg / News

The Indian government issued an executive order to make it easier for companies to buy land and eventually replace a law that has hindered manufacturing and constrained economic growth.

Prime Minister Narendra Modi’s administration yesterday promulgated the ordinance to spur infrastructure development in rural areas. It exempts at least five categories of land acquisition, including for industrial corridors, from rules that require the consent of at least 70 percent of potential sellers. The order will need to be approved in the next session of parliament, which starts in February, if it is to come into force permanently, according to PRS Legislative Research.

“It will definitely bring more clarity for investors,” said Dharmakirti Joshi, chief economist at Crisil Ltd. in Mumbai. “One of the main pain points has been the fuzziness of the land acquisition act. For any business to succeed, they want more clarity. Nobody wants to take a regulatory risk.”

The measure is intended to boost growth in Asia’s third-largest economy from near the slowest pace in a decade and accelerate Modi’s plan to urbanize the nation. Not one large tract of land has been acquired for development since the nation’s previous government passed an act in January 2014 that was supposed to make the process more transparent.

Bedeviled Investors

More than 1 trillion rupees ($15.7 billion) of projects are stalled as a result, including 600 billion rupees of roads, 20 new coal mines by state-run Coal India Ltd. and steel mills for ArcelorMittal and Jindal Steel & Power Ltd.

India’s land laws have bedeviled development for decades as consecutive governments courted votes from the nation’s 800 million rural residents. Previous rules forced owners to sell land if it was considered to be in the public interest. The laws were abused, leading to clashes between farmers and officials that fueled Maoist rebellions in some mineral-rich states.

Each of India’s 29 states now will have to adjust its own laws to conform with the new federal policy, Finance Minister Arun Jaitley said at a briefing in new Delhi yesterday.

Besides industrial corridors, other categories exempt from existing land-acquisition rules include: housing for the poor, rural infrastructure and defense.

The move will bring only partial relief as manufacturers would probably still have to adhere to the existing law and some conditions such as rehabilitation and resettlement remain on all projects, according to Pulkit Patni and Mohit Soni, Mumbai-based analysts at Goldman Sachs Group Inc.

Insurance, Coal

Power Grid Corp., Container Corp of India and Larsen & Toubro Ltd., India’s largest engineering business, stand to benefit, they wrote in a report yesterday.

Power Grid and Larsen rose 0.5 percent in Mumbai and Container Corp. climbed 1.3 percent, compared with little change in the benchmark S&P BSE Sensex (SENSEX) index. Reliance Industrial Infrastructure Ltd. jumped 6.2 percent today, Adani Ports and Special Economic Zone Ltd. increased 7.8 percent to a record.

This is the third time in December that Modi’s government has resorted to issuing an executive order to accomplish an objective after parliament’s session ended on Dec. 23 without votes on several key bills. Modi also has issued orders to permit more foreign investment in insurance and to make coal mining more transparent.

Modi’s Bharatiya Janata Party, which controls 52 percent of seats in the lower house, holds only 18 percent of the 245-member upper house. Since it’s improbable Modi will be able to control the upper house before 2018, he needs to find alternative ways to bring legislation into force.

-By Vrishti Beniwal and Abhijit Roy Chowdhury

Home Prices in U.S. Rise at Slower Pace in Year to October

Source: Bloomberg / Luxury

Home prices in 20 U.S. cities rose at a slower pace in the year ended in October, putting the market on better footing heading into 2015.

The S&P/Case-Shiller index of property values increased 4.5 percent from October 2013, the smallest gain in two years, after rising 4.8 percent in the year ended in September, a report from the group showed today in New York. The median projection of 24 economists surveyed by Bloomberg called for a 4.4 percent advance. Nationally, prices rose 4.6 percent after a 4.8 percent gain in the year ended in September.

While smaller increases will help put ownership within reach of more Americans as the job market improves and wage gains accelerate, prices are still up 25 percent from the depths reached following the recession. That rebound in property values has helped repair homeowners’ finances, which is contributing to gains in consumer confidence and spending that are driving the economic expansion.

“As you look forward, we’re considering a housing market that should be a more normal housing market, which means driven by the pace of income and other aspects of affordability,” said Michelle Meyer, a senior U.S. economist at Bank of America Corp. in New York, who correctly projected a slowing in home price appreciation. “Price appreciation should slow to fall more in line with the growth in income.”

Economists’ estimates in the Bloomberg survey ranged from gains of 3.9 percent to 5 percent. The S&P/Case-Shiller index is based on a three-month average, which means the October figure also was influenced by transactions in August and September.

Gaining Confidence

Another report today showed consumer confidence rose in December as Americans embraced more employment opportunities and persistent declines in prices at the gas pump. The Conference Board’s index increased to 92.6 from a revised 91 in November that was stronger than initially estimated, the New York-based private research reported.

Home prices in the 20-city index, adjusted for seasonal variations, increased 0.8 percent in October from the prior month, the biggest gain since March. It exceeded the Bloomberg survey median that projected a 0.4 percent advance. Unadjusted prices dropped 0.1 percent.

The year-over-year gauge, based on records dating back to 2001, provides better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.


While the year-to-year returns are cooling, more cities are starting to show a reacceleration, which bodes well for next year, according to the report.

Twelve cities experienced smaller year-to-year gains in October compared with the prior month, down from 18 in September and 20 in August. The eight cities that saw prices rise faster in October included San Francisco, Denver and Tampa, Florida.

“We are seeing hints that prices could end 2014 on a strong note and accelerate into 2015,” David Blitzer, chairman of the S&P index committee, said in a statement.

All 20 cities in the index showed a year-over-year gain, led by a 9.5 percent climb in Miami and a 9.1 percent advance in San Francisco. Cleveland showed the smallest increase, with prices rising 0.9 percent.

Borrowing costs still hovering near record lows may help draw more buyers into the market. The average rate on a 30-year, fixed mortgage was 3.83 percent in the week ended Dec. 25, the second-lowest since May 2013, according to Freddie Mac data. The rate dropped by 0.65 percentage point this year after rising 1.13 percentage points in 2013.

Home Sales

November data show residential real estate losing traction. Purchases of previously owned homes fell more than forecast in November to a 4.93 million annual rate, the weakest reading since May, figures from the National Association of Realtors showed last week.

New-home (NHSLTOT) sales unexpectedly declined in November to a four-month low, further demonstrating a lack of momentum in the market as it enters the slower winter months. Sales dropped 1.6 percent to a 438,000 annualized pace last month following a 445,000 rate in October that was weaker than previously estimated, Commerce Department figures showed last week.

Home-improvement retailer Lowe’s Cos. of Mooresville, North Carolina, is counting on healthy U.S. growth prospects to sustain the housing recovery over the next three years.

Builder Outlook

“Overall macro growth will bode well for industry, particularly, the improving trends in income and housing,” Chief Financial Officer Robert Hull said at a Dec. 11 investor conference. “A strengthening job market should contribute to disposable personal income growth,” while households already are “becoming more financially fit,” he said.

Payroll gains on track for their best year since 1999 also are bolstering potential home buyers. Employers have added an average 240,910 jobs per month in 2014 through November and the unemployment rate has fallen to 5.8 percent from 6.7 percent at the end of last year. The Labor Department will release December figures Jan. 9.

-By Michelle Jamrisko

Pending Sales of U.S. Existing Homes Increase 0.8% in November

Source: Bloomberg / Luxury

Contracts to purchase previously owned homes rose in November as employment gains and low borrowing costs helped bring potential buyers into the market.

The pending home sales index advanced 0.8 percent after a revised 1.2 percent decrease in October, the National Association of Realtors said today in Washington. The median projection in a Bloomberg survey of economists called for the index to rise 0.5 percent, with estimates ranging from a decline of 1.5 percent to an advance of 3.5 percent.

“The consistent economic growth and steady hiring we’ve seen in the second half of this year is giving buyers enough assurance to consider purchasing a home before year’s end,” NAR chief economist Lawrence Yun said in a statement. “With rents now rising at a seven-year high, historically low rates and moderating price growth are likely to entice more buyers.”

Purchase contracts climbed 1.7 percent in the 12 months ending in November after a 2.1 percent annual increase in October on an unadjusted basis, the NAR report showed. The three months of year-over-year advances follow a series of 11 straight declines.

The pending sales index was 104.8 on a seasonally adjusted basis. A reading of 100 corresponds to the average level of contract activity in 2001, or “historically healthy” home-buying traffic, according to the NAR.

Pending sales increased in three of four regions from the previous month, led by a 1.4 percent gain in the Northeast. Contract signings climbed 1.3 percent in the South and 0.4 percent in the West. They fell 0.4 percent in the Midwest.

Leading Indicator

Economists consider pending sales a leading indicator because they track new purchase contracts. Existing-home sales are tabulated when a deal closes, usually a month or two later.

Those re-sales dropped more than forecast last month to a 4.93 million annual pace, the weakest reading since May and down 6.1 percent from a 5.25 million pace in October, NAR data showed last week.

New-home construction exceeded a 1 million annualized pace in November for a third month. Housing starts declined 1.6 percent to a 1.03 million annualized rate, Commerce Department data showed.

-By Michelle Jamrisko

U.K. House-Price Growth Weakened to 13-Month Low in December

Source: Bloomberg / Luxury

U.K. house-price growth slowed to its weakest in more than a year in December, adding to evidence that the market for residential property is cooling.

The annual gain in value dropped to 7.2 percent from 8.5 percent in November, the lowest rate since November 2013 and the fourth consecutive slowdown,Nationwide Building Society said in a statement on its website today. Prices rose 0.2 percent on the month for a third straight increase.

The housing market has slowed this year, with home-loan approvals falling to their lowest in 16 months in October, as affordability is stretched and the Bank of England moves to prevent a buildup of unsustainable lending. Still, Nationwide said the slowdown was “surprising,” given gains in employment, a pickup in wage growth and low mortgage rates.

“If the economic backdrop continues to improve as we and most forecasters expect, activity in the housing market is likely to regain momentum in the months ahead,” Robert Gardner, chief economist at Nationwide, said in the statement. “Hopefully, this will set the stage for house-price growth gradually converging with income growth in the quarters ahead.”

The average house price stands at 188,559 pounds ($292,400), with growth for the three months to December at 1 percent compared with 0.9 percent in the quarter through November, Swindon, England-based Nationwide said. The 7.2 percent gain in values nationally this year compares with 8.4 percent in 2013.

Regional Breakdown

Nationwide said house-price inflation moderated in all but one of 13 regions in the fourth quarter from a year earlier. London, the strongest performing area, posted a gain of 17.8 percent compared with 21 percent in the previous three months.

“While we expect some pick-up in housing-market activity in 2015 from the recent lows, we expect the increase in activity to be limited, thereby keeping a lid on house-price increases,” said Howard Archer, an economist at IHS Global Insight in London. “Many people may also be deterred from buying houses because they look pricey in a number of areas after recent sharp rises.”

-By Scott Hamilton

Housing Costs for Renters Rose by $20.6 Billion This Year

Source: Bloomberg / Personal Finance

U.S. renters paid $441 billion for apartments and houses this year, a $20.6 billion increase, as fewer Americans owned their homes and landlords with tight inventories raised leasing charges, Zillow Inc. (Z) said today.

The number of rental households grew by 2 percent, or 770,000, nationally during 2014, according to the Seattle-based real estate information service. In the New York metropolitan area, the largest U.S. housing market, the number of rental residences expanded by 63,000 to 3.4 million, with tenants spending a total of $50 billion for shelter.

Demand for rentals has grown after owners of more than 5 million U.S. homes went through foreclosure since 2007, mortgage lending tightened and younger families postponed buying because they can’t afford or prefer not to own property. That may change slowly as rents rise and the economy improves, said Skylar Olsen, senior economist at Zillow.

“Spending a lot for rent means it’s hard to save for retirement or a down payment and makes it more difficult to move from being a renter to being a homeowner,” Olsen said in a telephone interview. “At the same time, it gives greater incentives to start seeking out an opportunity to be a homeowner.”

Zillow projects rents will increase 3.5 percent in 2015, compared with a gain in home values of more than 2.5 percent. The U.S. inflation rate was 1.3 percent in the 12 months through November.

Home Prices

Home prices will rise more slowly than rents because fewer investors are competing to buy a smaller supply of discount-priced foreclosures, while the inventory of non-distressed properties is growing as prospective home sellers gain equity with appreciating prices, Olsen said.

The U.S. homeownership rate fell to 64.4 percent in the third quarter, an almost 20-year low, according to the Census Bureau. Renter-occupied residences grew by 1.2 million, while owner-occupied households fell about 657,000 in the 12 months through September. The rental vacancy rate dropped to 7.4 percent in the quarter, creating a shortage of about 350,000 homes by historic standards and giving landlords leverage to raise rents.

Steepest Increases

U.S. rents rose an average 3 percent this year, according to the Zillow report. The steepest increases were in areas where technology job growth and limited new development drove up housing costs. Rents in San Jose, California, already the nation’s highest in 2013, jumped 12 percent to an average of $1,807 a month. San Francisco’s leasing costs climbed 11 percent to $1,598, and Denver’s increased 8.7 percent to $1,066.

Builders of multifamily homes broke ground at an annual pace of 340,000 in November, compared with an average 266,000 since 1994, according to Commerce Department data. Nationally, most of the new apartments being built are higher-cost units, which is limiting landlords’ ability to raise rents at the high end of the market while doing little to ease prices for tenants at the low end, Olsen said.

Rents in the New York area increased 1.7 percent from 2013, to a monthly average of $1,228, according to Zillow. They climbed more slowly than the U.S. average as some tenants, even in pricey Manhattan, became buyers or balked at paying landlords more.

A report this month by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate showed the median monthly apartment rent in Manhattan was $3,225 in November, up 2.6 percent from a year earlier. Rents in Brooklyn climbed 5.3 percent to a median of $2,948, while in Queens, they fell 8.2 percent to a median of $2,525, the firms said.

-By John Gittelsohn