Islandwide launches of new private homes in December 2008 slumped to a record low since the Urban Redevelopment Authority (URA) started releasing the monthly figures in June 2007.
Developers placed just 157 units for sale last month, down by 59 per cent from November. Analysts said there has been softening demand for homes. But the low launch volume could also be due to seasonal adjustment and developers holding out for the government's Budget announcement next Thursday.
Analysts, however, said that not all developers can afford to delay projects.
Donald Han, managing director, Cushman & Wakefield, said: "Smaller developers may decide to sell in order to move assets and move their inventory. So, price cutting may happen at a strategic level for smaller developments... and also the secondary markets where there will be fiercer price cuts."
Overall, market watchers said they expect property prices to erode by another 5 to 7 per cent in the first quarter this year.
They said prices in the luxury home segment could see a 25 per cent drop, while suburban and mid-tier properties may be 10 to 20 per cent cheaper over the next 12 months.
December sales volume also fell, dropping 32 per cent on-month to 131 units, as home buyers continued to be cautious.
Analysts said that even the fairly resilient mass market segment is starting to feel the strain of the economic downturn. However, data also showed that home hunters are still in the market for good buys.
Dr Chua Yang Liang, head of research & consultancy at Jones Lang LaSalle, said: "The Ritz Carlton Residences, back in December 2007, some 3 transactions were reported at a median price of some S$5,000 per square foot. Now, some 8 transactions were reported by the developer at a median price of some S$3,000 per square foot."
Projects in prime areas like Newton Edge also saw good take-up, with 40 units sold in December at an average price of S$1,200 per square foot. Analysts said this translates to less than S$1 million for a unit, which is the threshold for most buyers in the current market.
For the whole of 2008, developers sold an estimated total of 4,287 units, 71 per cent shy of the 14,811 new units sold in 2007, bringing developers' sales volume to a nine-year low.
Industry players expect the property market to remain quiet over the next six months until there is a clearer indication of where the economy is heading.
They hope the Budget statement, to be announced next Thursday, will provide measures to support companies and save jobs, which will have an impact on the property market.
The items on their wish-list include vouchers to boost domestic spending and tax cuts to lower business costs. - CNA/ir
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