The head of Singapore's property developers' body has warned that various negative factors could cause home prices to plummet - especially if a sell-off gets under way.
And property cooling measures, if left fully in place, "could actually increase the risk to the real estate market and economy", Mr Augustine Tan said yesterday.
Mr Tan, president of the Real Estate Developers' Association of Singapore (Redas), was speaking at the association's mid-autumn festival celebration at Orchard Hotel.
Senior Minister of State for Finance and Transport Josephine Teo was the guest of honour.
Mr Tan, who is also executive director of property sales and corporate affairs at Far East Organization, congratulated the Government on the strong mandate it secured in last week's polls, adding: "The Government has shown it is prepared to listen and make the necessary changes to meet the aspirations and needs of Singaporeans."
Mr Tan said the objectives of the Government and developers for a stable and sustainable property market are aligned.
But the property market today is dramatically different from the one when cooling measures were put in place. Vast amounts of cash from quantitative easing had fuelled record sales and prices, he said.
But in the wake of the cooling measures, prices had fallen for a seventh straight quarter in the April to June period, "the longest sustained period of decline in 13 years".
There is a total supply of more than 67,000 uncompleted private homes in the pipeline, nearly 20 per cent of total stock. But the monthly volume of sales has fallen by over 80 per cent since the peak in early 2013, he added.
Rentals are also expected to fall sharply over the next 12 to 18 months, while regional and global conditions remain uncertain.
On top of this, there is increased volatility in financial markets, an imminent interest rate hike and slower economic growth.
"This deterioration in economic sentiment, the worsening supply-demand imbalance and rising vacancy rates risk precipitating a downward spiralling of property prices when people are selling because prices are falling," he said.
This has already unfolded at some Sentosa projects, for example, he said. "It is like the stock market. When prices come down, people sell as they anticipate further price falls. When prices come up, they buy," he added.
"The property market is clearly heading for a different phase and there is an urgent need to think about how we can manage the exit so there is a soft landing for the market," Mr Tan said in his speech, on an exit from cooling measures.
"We should re-examine and recalibrate or de-layer the permutations of the various measures to minimise risks," he added.
Asked which measures should be recalibrated, he said it depends on what may be tweaked without causing great ripples to the market.
Some industry players agreed with his broad analysis. Although there is no real panic in the market yet, it is possible for a perfect storm to take place, one of them said.
"As an open economy, Singapore is affected by a slowdown in major economies, especially China; and the market can move into reverse gear very quickly... Higher interest rates could also have a knockout blow on sentiments and highly geared individuals holding properties," added Mr Donald Han, managing director of Chestertons.
But Qingjian Realty (South Pacific) general manager Li Jun was a little more optimistic over how far prices could fall, noting that land supply has been trimmed, meaning fewer buying opportunities.