Apr 2, 2014
Private home prices are expected to drop further, following a tumultuous year which saw the government introducing the most severe set of property cooling measures and lending curbs, according to PropNex Realty.URA flash estimates show Singapore private home prices continued its decline in Q1 2014 as real estate investments were affected by government intervention.
The private residential property price index dropped 1.3 percent to 211.6 points in Q1 of this year, marking its second consecutive quarterly decline.This could mean further price declines this year, given the bumper supply of new homes expected to hit the market and potential interest rate hike.
“By now, we are convinced that the private residential market has turned the corner and is entering into a consolidation phase with reduced transactional activity and prices under pressure,” said PropNex CEO Mohamed Ismail.He noted that the government’s various cooling measures have curbed demand from all groups of home buyers.
“The demand for private homes might also be affected by the drop in HDB resale prices. This possibly deterred sellers who are looking to sell their HDB flats and upgrade. The smaller gain achieved from the sale of their HDB will limit their budget for their new private property and may cause some to put their plans on the backburner because the potential profit is insufficient to allow them to upgrade,” added Ismail.
Moving forward, prices are expected to cool further over the course of 2014 and 2015, although it will remain resilient in the long term.
“We expect prices to remain relatively stable with a bit of downward pressure in the first half of 2014... We are looking at an around five to six percent correction for the rest of the year, but it won't be a knee jerk fall,” he said.As the seventh round of cooling measures left an impact on the market, Ismail believes that it is “time to tweak the Additional Buyers’ Stamp Duty (ABSD), while maintaining the Total Debt Servicing Ratio(TDSR) which was intended to ensure buyers’ financial prudence.”
Info courtesy - PropertyGuru.com.sg