Falling property prices in Singapore expected to dive next year by up to 20%

by Tan Liang Tuan Gigi 11 Nov 2014
Singapore's private residential property prices experienced steady declines in September, according the latest quarterly data from the Urban Redevelopment Authority.

Both private and public home prices continued to slip in the third quarter of the year. Private home prices fell 0.6% and are now down 3.8% on an annual basis. This is the fourth straight decline, albeit a slight deceleration, after a fall 1.0% in the second quarter. But private home prices are still 56% above the last trough in 2009.

Public housing continued to fall for the fifth straight quarter by 1.6% compared with 1.4% in the second quarter of the year and have now fallen 6.8% from the peak of the market.

In August sales fell 15% month on month and 43% year on year. It is the lowest monthly figure since December 2013.

But the outlook is pessimistic, according to a report from Barclays which says that prices are expected to plunge by 20% in 2015, with vacancy rates expected to hit a record high 10% in 2016.

According to Barclay's, the drop is in view of market expectations of rising interest rates, and will coincide with peak supply as unsold inventory rises across both high and low end property sectors.

‘We expect both volumes and prices to slide given the ongoing government curbs, looming oversupply, and rising interest/mortgage rates in the second half of 2015. We maintain our negative stance on the Singapore residential sector,’ the report says.

‘We see an oversupply of private housing properties and we expect prices to fall 20% by 2015, in view of market expectations for interest rates to rise, coinciding with peak supply and our assumption that the vacancy rate could reach a record 10% by 2016,’ it adds.

‘We believe the government will only start unwinding measures when prices fall a cumulative steeper 10 to 15%, perhaps in the middle of 2015,’ it concludes.

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