Real Estate Blog - Singapore Property Market

PROPERTY stocks took a beating following news that private home prices fell for the first time in 4-1/2 years.

And the worst is not over yet - the share prices of Singapore-listed developers can be expected to continue to slide, analysts say.

Singapore’s three biggest developers by market capitalisation - CapitaLand dropped 10 cents to close at $2.94, City Developments shed 36 cents to end at $8.01 and Keppel Land declined 14 cents to $2.61.

‘With macro-economic growth not expected to recover in the near term, the price correction would continue through 2009, falling between 8-15 per cent, with the CCR (core central region) bearing the brunt of the decline.’

Investors are now holding off buying homes in anticipation of prices falling further, and the poor demand is affecting market sentiment on property counters.

There is also the risk that tighter credit could lead to higher interest rates, which would increase the cost of holding on to properties and potentially lead to a larger number of ‘fire sales’ as more projects approach completion and property investors start to do their sums.

Some buyers could be waiting to snap up distressed assets on the secondary market, contributing to lower sales for developers.

Home prices need to fall further before demand could go in the opposite direction, and property counters recover.

PRICES of private homes have fallen for the first time in four-and-a-half years

This marks the end to the property boom that started since 2004.

Consultants say prices are likely to keep falling well into next year.

Overall prices of private homes slipped 1.8 per cent, after flattening out in the second quarter.

Consultants called it a turning point after almost a year of deadlock between buyers and sellers.

Homes in the city-fringe areas led the price decline, dropping 2.1 per cent in areas ranging from Queenstown and Bishan to Marine Parade and Sentosa.

In the best residential areas - Orchard Road, Holland and Bukit Timah districts, prices fell for the second straight quarter, dipping 2 per cent, after falling 0.1 per cent in the April to June period.

Suburban prices held steady and actually rose slightly by 0.1 per cent in the third quarter, on top of a 0.9 per cent rise in the previous three months.

While sales will slow in the fourth quarter, ‘there could be some sparks of activity if interesting projects such as Marina Bay Suites, Sentosa Quayside and The Arte on Thomson Road are launched’, said Mr Li Hiaw Ho, executive director of CB Richard Ellis Research.

Citigroup analyst Wendy Koh predicts that high-end home prices will fall by 25 per cent, the mid-end by 15 per cent and mass market by 5 to 10 per cent.