Singapore's property market caught its first chill from the coronavirus with quarterly private home prices declining for the first time in a year, but market watchers said they are not expecting a sharp fall in prices going forward.
Prices of private residential properties dropped 1.2 per cent in the first three months of this year from the previous quarter, according to flash data from the Urban Redevelopment Authority yesterday.
It is the first quarterly drop since prices declined 0.7 per cent in the first quarter of last year.
Private home prices rose 2.7 per cent last year in a modest recovery from the July 2018 cooling measures, with prices up 0.5 per cent in the final quarter of 2019.
The quarterly fall in prices was broad-based, across both landed (minus 1.7 per cent) and non-landed (minus 1 per cent) segments, as well as across all regions.
Prices of non-landed homes in the prime areas or core central region (CCR) fell by 1.5 per cent, prices in the city fringes or the rest of central region dipped by 0.5 per cent, while those in the outlying areas or outside central region declined by 1 per cent.
On a yearly basis, overall property prices are up 2.2 per cent.
Market watchers said the impact of the Covid-19 pandemic on the property market as Singapore heads into a recession will depend on how long the outbreak lasts and when it will be contained, while noting that the hefty fiscal support and consumer loan relief measures should help stem job losses.
The property market is likely to stay afloat as long as unemployment remains low and people are able to service their mortgages, said Ms Christine Sun, head of research and consultancy at OrangeTee & Tie.
She said she is not expecting dramatic price corrections in the coming months despite the worsening outbreak.
"Many property measures have already been put in place over the past years to ensure financial prudence among buyers. The possibility of many home owners slashing prices or defaulting on housing loans is not high," she added.
Mr Wong Xian Yang, Cushman & Wakefield's senior manager for research, Singapore and South-east Asia, said prices may prove to be more resilient than in previous recessions.
During the global financial crisis of 2008-2009, for example, overall property prices fell by 24.9 per cent over four consecutive quarters.
The latest measures allowing individuals to apply to defer their property loan payments up to the end of this year will indirectly help to support current prices, he noted.
He added: "For now, fire sales are not expected as unemployment rates remain relatively low and most property owners are not under huge pressure to sell.
"Furthermore, the majority of property sales over the last few years have been driven by local owner-occupiers and investors, the majority of which are holding for the long term."
Mr Ismail Gafoor, chief executive of PropNex Realty, said he is expecting property prices to drop by 2 to 3 per cent this year. Genuine buyers will take advantage of the "silver lining" of lower interest rates to pick up "rightly priced" projects, he said.
The Singapore inter-bank offered rate, to which many home loans are pegged, has plunged in recent weeks in response to the United States Federal Reserve's emergency moves to slash its key rate to near zero.
Mr Desmond Sim, CBRE's head of research, South-east Asia, said prices could correct by 5 to 8 per cent this year.
"While we expect demand for housing to remain, current economic sentiments may put some buyers' decisions on hold," he said.
The CCR, where homes are most expensive, might see larger adjustments due to the high inventory of project launches for sale and fewer Chinese home buyers, he added.
The flash estimates are compiled based on transaction prices given in contracts submitted for stamp duty payment and data on units sold by developers up till mid-March.