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THERE was good news on the home front for the second quarter with prices of both HDB and

private properties going up, though neither are going through the roof yet.

Prices of HDB resale flats rose 1.1 per cent in the April-June quarter - their fastest pace in two years - and a marked contrast with the next-to-nothing 0.2 per cent rise in the first quarter.

But prices are still below the levels before anti-cashback measures - which aimed to stop people from artificially inflating prices to get a bigger loan - kicked in last year, and analysts say the recovery will be gradual and could keep a lid on low-end condo prices.

Still, initial Urban Redevelopment Authority estimates showed that private home prices rose 1.6 per cent in the quarter, pushing levels to the highest point since the third quarter of 2001.

Luxury homes led the way, with some spectacular results, consultants said. A unit at St Regis Residences in Tanglin Road sold for more than $3,000 per square foot, 25 per cent above the previous record of $2,400 per square foot achieved in 1997.

Several high-value deals and strong demand could have spurred the rise with more new launches and better take-up rates, said consultancy CB Richard Ellis. New launches, for instance, comprised about 2,800 new homes in the period, up from 2,111 in the previous quarter.

But the activity in that area was not matched in the mass market sector, which remained largely insipid, said consultancy Knight Frank.

Buyers of mass market private homes tend to be HDB flat upgraders, so weak HDB resale prices flow on to poorer demand for these homes.

This in turn could keep the mass market, which is still largely stagnant, in check for a while longer.

While HDB resale prices are up, the rise appears fragmented, with resale levels still about 3.6 per cent below those in the first quarter last year.

That was before the anti-cashback measures took effect. These measures were behind the huge 4.8 per cent price dip in the second quarter last year.

There was something of a recovery in the second quarter this year. The good take-up for relatively scarce, well-located HDB resale flats and the slower release of new flats via HDB's walk-in-selection programme seemed to have lifted resale prices, said Mr Eugene Lim of property firm ERA Singapore.

HDB launched 897 units in the second quarter, compared with 3,297 units a year ago.

ERA figures showed that some flats sold at $5,000 to $20,000 above valuation, though this 'phenomenon', as Mr Lim calls it, is limited to highly select units - four- and five-room resale flats near MRT stations, on high floors and in good condition.

HDB resale prices could rise by 3 to 6 per cent this year, say consultants, compared with a 4.7 per cent fall last year. Private home prices are tipped to rise 4 to 8 per cent, up from a 3.9 per cent increase last year and 0.9 per cent increase in 2004.

joyceteo@sph.com.sg