What to expect for Singapore private property prices in 2015

Experts reckon that the slowdown in private property prices in the last quarter of 2014 was characteristic, thanks to the year-end holiday period, ailing demand and curtailed home financing. -- PHOTO: ST FILE
Experts reckon that the slowdown in private property prices in the last quarter of 2014 was characteristic, thanks to the year-end holiday period, ailing demand and curtailed home financing. -- PHOTO: ST FILE

SINGAPORE - Private home prices fell 1 per cent in the three months to Dec 31 last year, but it came as no surprise to analysts.

The decline was higher than the 0.7 per cent dip in the previous quarter, but experts reckoned that the slowdown was characteristic of the last quarter, thanks to the year-end holiday period, ailing demand and curtailed home financing.

The Urban Redevelopment Authority's property price index for the full year showed on Friday that prices slipped a total of 4 per cent for the whole of 2014 and 4.9 per cent in five straight quarters of declines.

Here are what some market watchers say will be in store this year:

Ms Chia Siew Chuin, director of research & advisory, Colliers International:

The moderated private residential property transaction levels and price corrections are seen as better aligned with the slower rate of economic growth, which has slowed to a weaker-than-expected 2.8 per cent this year - an indication that the market is being steered from a state of excess exuberance seen in the not-so-distant-past towards greater stability and sustainability.

With various downside headwinds expected to keep a lid on home-buying demand, prices of private residential properties are expected to remain on a path of moderation in 2015. These include the continued enforcement of cooling measures amid the tightened credit environment, a mounting supply of new homes, a weak leasing market and the impending rise in interest rates. Barring external shocks and surprises, prices are expected to moderate by between 5 per cent and 8 per cent in 2015.

Mr Desmond Sim, research head, South-east Asia, CBRE:

We expect prices to continue falling but not at a faster rate because developers and re-sellers have not pressed the panic button yet. General indicators of economic activity have still be positive, mortgage rates are still very low - so there's no distress yet.

Our point of view is, no matter how much prices have changed, there have been more sales of between $800,000 and $1 million than any other transaction in the market, so affordability is still there and developers are still creating such products for the market. New launch activity, however, will be like the fourth quarter last year - minimal. Developers do not want to eat into each other's pie when demand is low.

Mr Nicholas Mark, research head, SLP International:

Unfortunately, we could see more of what happened in the second half of 2014 - weak demand in the private housing market and a gradual price decline, unless the Government were to adjust housing policies. The cooling measures are for a stable property market, but there are growing questions over just how much prices should to reach a stable market.

I think the Government should let stakeholders in the market know what is the end point, since we have such a high rate of homeownership here. The group that will be worst hit are investors who have high bank borrowings and cannot sell the property because of the seller's stamp duty. We could see more mortgagee sales this year, as a result. There will be people who will be happy, such as the buyers, but they will also be trying to catch the market at the lowest point. So demand will still be weak and falling prices will become a self-fulfilling prophecy.