Sales of private homes in Singapore improved 17.5 per cent in September, compared to the previous month.
But analysts said the pickup fell short of expectations, given the low base in August caused by the Hungry Ghost Festival. The seventh month of the Lunar calendar is traditionally regarded as an inauspicious period and buyers usually refrain from making purchases during that time. Almost 300 per cent more units were launched for sale in September, compared to August. Property developers sold 376 units in September, just 51 units more than the preceding month. Nonetheless, some analysts see something to cheer about in the data.
Ku Swee Yong, director, Marketing & Business Development, Savills (Singapore), said: "I already see that as a positive (sign) because in September, the stock market beat the whole market down, so many investors were spooked."
The stock of private residential properties has been building up in the past year and was compounded by a large oversupply in September.
As buyers become more cautious in light of the economic downturn, prices are expected to fall.
Nicholas Mak, director, Consultancy & Research, Knight Frank, said: "Whatever gains made in the first half of this year will probably be lost by Christmas. Depending on how the global economic and financial situation plays out, I think there's still a lot of uncertainty and turmoil out there.
"There is a possibility we could see further weakness in home prices in 2009, especially if the Singapore economy were to slip into a prolonged recession.
"At the moment, we haven't seen some of the major bad news like massive retrenchments or fall in salary levels. If such a thing were to happen, we could see people giving up homes or downgrading."
Knight Frank said bad economic outlook could result in a double-digit fall in home prices in 2009. But others are not as pessimistic.
Ku said: "Private residential prices in mass market will still hold up very well, probably for the next 18 months... we believe so because the demand for public housing is still strong.
"In the third quarter, HDB price index for resale HDB (flats) still managed to climb 4.2 per cent. That should support mass market prices for HDB upgraders very well."
However, all agree that within the private residential sphere, luxury properties will bear the brunt of price pressures.
"For luxury and mid-tier residential market, we think that over the next 18 months, we might see about 5, 10 per cent drop. For the very luxurious properties, about 15 per cent drop in prices," Ku added.
Luxury properties tend to attract speculators who have retreated from the market in the current unpredictable financial environment. - CNA/so
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