Analysts predict Singapore private property prices to fall up to 26% in coming years

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Singapore residential property market set for a significant downturn

Singapore’s residential property market is set for a significant downturn in the next three years and prices are expected to fall, it is claimed.

Prices could fall between 22 and 26%, according to Daiwa Research.

‘We believe the residential property market could remain depressed for several years, triggered initially by a likely forthcoming gross domestic product slowdown in 2012 and lingering global economic uncertainty,’ it said in a new report.

From late next year, Daiwa said, structural issues such as the rapid build up of unsold inventory in the primary market and vacant rental units will take centre stage and keep home prices and rents in check for several years.

Daiwa based its prediction on the currently high unsold inventory levels and forecast an influx of new supply that together will flood the market. Already, new housing supply at the end of September hit the highest level since pre-global financial crisis levels at 86,322 units noted Daiwa. It added that just 43%, or 37,114, of these units have been sold.

The mass market segment will hold up slightly better than high end properties, supported by better affordability and the resilience in the resale prices of Housing and Development Board flats, Daiwa added.

It has downgraded its view of Singapore’s property sector to negative from neutral, adding that ‘it is hard for us to see the developer shares outperforming the Straits Times Index over the next six months’ despite their underperformance in the year to date.

Meanwhile, another report shows that nearly 57% of home buyers in Singapore believe the government is either on track or will likely exceed expectations to cool the public housing market in the next five years.

Some 19.9% feel prices will stabilise over the next one to two years and another 37% who feel three to five years is a fair assessment for public housing prices to stabilise, according to a poll from Singapore property website, iProperty.

It asked people whether they think public housing prices will stabilise within the next three to five years as mentioned by Minister for National Development Khaw Boon Wan earlier this year. Some 31.9% said prices will never stabilise and more radical cooling measures are needed.

The government launched a series of new Build to Order projects in July, September and November, injecting several thousand new units to bring stability to the public housing market.

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