Sales of private properties have been sliding amid a standoff between buyers and sellers, say market watchers.
In February, sales for new launches were only one tenth of the record numbers seen in August last year.
Analysts also say that residential property prices may have finally peaked, although the fundamentals still support long-term growth. URA's latest flash estimates showed private home prices rose 4.2 percent in the first quarter this year, much slower than the 6.8 percent pace in the last quarter of 2007.
Last year, property launches drew a crowd despite the extravagant price tags. But now, the market is paying for it in more ways than one. Prices are coming off their highs, leaving some buyers with significant losses.
Chesterton's head of research & consultancy, Colin Tan, said: "What has happened over 2007 is that prices have risen quite rapidly....Part of the reason prices have gone up (is) because people are valuing properties not for the moment but maybe 2, 3 years down the road. In that sense, prices have raced ahead of fundamentals."
Seen in that light, a correction was perhaps waiting to happen. Right now, few are willing to pay a premium for homes, and fewer still are willing to sell for less.
Chesterton's Colin Tan said: "There's a standoff between buyers and sellers. The question now is, of course, (for) how long can the sellers hang on. It all depends on the economy. If things get a lot more worse, you may find that some investors may have to give up their properties and so prices will start to correct."
"For the short term, home prices in high-end (places), especially districts 9, 10, 11 will remain flat or go through turbulence because they have gone up sharply. Some homes, which have gone up to $4,000 psf, will need the rest of market to catch up before they find further support," said Knight Frank's director, Nicholas Mak.
While URA flash estimates showed private property prices increased 4.2 per cent in the first quarter, the rise was only for a handful of properties.
Chesterton's Colin Tan said: "I'd say the market is healthier if prices only rose 2 per cent and on a stronger sales volume, like 5 or 6 times the current volume."
Still, the longer-term outlook appears to be positive.
Knight Frank's Nicholas Mak said: "(Sales) volumes could remain thin for another six or nine months, but I think that after that.....market prices and rentals will start to grow at a gradual pace. The Singapore property market has all the factors necessary for it to continue to grow."
Residential property prices grew by over 30 per cent last year. Analysts said the pace is too fast to be sustainable. A more palatable rate, they said, is 10 per cent. - CNA/ir
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