Home prices, sales could remain weak as US sub-prime concerns linger
A MONTH ago, property consultants were predicting that the cooling market would pick up after June. That optimism has fast drained away.
Consultants now expect home prices and sales to remain weak for up to a year from now, after official estimates yesterday confirmed that price growth was tapering off.
‘We can expect residential prices to continue weakening over the next 12 months’, in the light of the United States sub-prime debacle and an expected US recession, said Jones Lang LaSalle (JLL). Other consultancies, such as CB Richard Ellis Research, believe price growth will slow further in the second quarter, to ‘1 per cent or 2 per cent’.
Home sales are also plunging as buyers retreat - and they are expected to stay low as sellers dig in their heels to wait out the slowdown.
New home sales were likely to have dropped in the first quarter to one of the lowest levels ever, second only to those recorded during the Sars period.
In the secondary market, sales have fallen to 2005 levels, according to estimates from Savills Singapore.
Mid-tier private properties on the city fringe, such as in Novena, Toa Payoh, Marine Parade and Queenstown, are likely to be hardest hit by falling buyer demand.
These areas saw the biggest slowdown in price growth in the first 10 weeks of the year, suggesting that prices in these regions may be peaking, said JLL.
Buyers in these areas have shallower pockets and are more sensitive to market sentiment, it added.
In the HDB segment, prices have stabilised at about $50,000 cash over valuation or less, said Mr Eugene Lim, assistant vice-president at ERA Realty Network.
‘Resale flats priced higher than that take much longer to sell or may not sell at all.’
Phillip Securities Research, meanwhile, aired concerns over the ‘huge supply’ of homes due to be completed in the next two years.
Supply is ‘expected to exceed the demand from buyers and result in a slide in local property prices from 2010′, it said.
HDB plans to release another 5,000 new build-to-order flats in the next six months. There are also 64,900 private homes in the pipeline, of which 90 per cent will be completed by 2011, while 60 per cent have yet to be sold.
Most experts believe, however, that confidence and demand will return by year-end - as long as the Singapore economy stays robust.
‘Sellers now take a while to sell their homes, but there are still buyers,’ said Mr Eric Cheng, the executive director of HSR property group.
‘Last year, it took maybe a month to sell a home. Now, it takes two months. But in 2000 or 2002, it took a year,’ he said.
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