FOR a health check of the private residential market, an investor needed only to check out the sales at an upmarket condo project in Ang Mo Kio when it was relaunched recently.
The developer attracted scores of buyers in a flat market - but only after slashing prices by 12 per cent.
The discounting lends credence to the forecasts made by some property analysts that private residential prices may fall by between 10 and 15 per cent over the next two years.
There are a range of issues feeding into this narrative, from both the supply and demand sides of the equation.
On the demand side, Nomura analyst Sai Min Chow recently noted home buyers' waning appetite for mass market condos.
She estimated that of the 12,200 unsold homes built on land sold by the Government since December 2011 - when the additional buyer's stamp duty (ABSD) was introduced to cool the buying fervour - 8,200 are in the suburban areas typically favoured by Housing Board (HDB) flat upgraders.
But even in a worst-case scenario where all this inventory is sold at a 30 per cent discount to current prices, she thinks property developers' share prices will not be that badly affected.
Some property shares would even be worth between 10 and 35 per cent more than their current levels, she calculated.
Ms Sai's analysis suggests that property developers may not lose much sleep even if they have to slash prices to move units.
But the same cannot be said of the legions of mum-and-dad investors who have sunk their life savings into a condo in the hope of achieving a higher return than the crumbs on offer at the banks.
Their consolation must lie in the fact that home prices are holding up so far. In the first quarter, private home values slipped by only 1.3 per cent from the previous quarter, after sliding 0.9 per cent in the preceding three months.
This seems to suggest a gradual correction is in the works rather than the more dramatic double- digit percentage drop analysts have been predicting.
Still, worse may be to come. The big question for many is how the market is going to cope with the deluge of completed units coming onstream between now and 2016. That may, in turn, depend on how HDB home owners who have bought private units - either to move into or to rent out for investment income - will fare.
This group of buyers has grown in importance over the years. In the fourth quarter of 2008, buyers with HDB addresses bought 255 new private homes. Two years later, in the fourth quarter of 2010, that number had jumped to 1,990.
It then more than doubled to 4,046 units in the second quarter of 2012, even though the Government had imposed the ABSD. This may have been partly due to developers softening the blow by giving cash rebates on stamp duties.
Then last year, property loan rules were tightened. A borrower's total monthly loan repayments now cannot exceed 60 per cent of his gross monthly income. But HDB owners took this in their stride as well, buying 1,200 new private homes in the first quarter of this year.
Let's consider the impact on the private rental market when these units bought by HDB owners are completed.
Based on estimates provided by developers to the Urban Redevelopment Authority (URA), private housing completion may hit over 17,000 units this year - up from 13,150 completed last year and 10,329 in 2012. A further 48,000 units are scheduled to flood the market in the next two years.
This increase in supply may depress rental growth in the private housing market.
Rental statistics have not raised any alarm bells yet, with private residential rentals easing only 0.7 per cent quarter-on-quarter as at the end of March.
However, tucked into a recent Savills residential property report was an observation that in the first quarter, the vacancy rate for completed units in the eastern region had almost doubled, from 3.4 per cent to 6.1 per cent.
This, Savills, noted, was partly due to newly completed large projects such as Waterview on Tampines Avenue and The Shore Residences on Amber Road.
If the trend from the eastern region is a gauge, vacancy rates will shoot up as more units are completed. This may cause rental yields to come under pressure, especially in the suburban areas favoured by HDB owners and where most condo completions will be.
Private home owners renting out their suburban properties will also face competition from landlords renting out their HDB units.
What may aggravate the problem is that landlords can no longer claim vacancy refunds on property taxes. So rather than cope with the various expenses of leaving a unit vacant, they may lower their rental expectations instead.
A different problem may confront those wishing to sell their HDB flats and move into their new condos. In the past three years, the HDB has launched a massive 77,000 build-to-order flats (BTO) on the market to help to meet the demand for public housing.
At the same time, HDB has allowed singles to buy new two- room flats in non-mature estates, and given second-timers a higher chance to ballot for a BTO flat.
It has also introduced a three- year waiting period for new permanent residents before they can buy HDB resale flats.
These measures have dampened demand for HDB resale flats. Resale transactions fell to just 18,100 last year from 25,094 in 2012 - the fewest since 1997.
Mr Tan Tiong Cheng, chairman of property consultant Knight Frank, said the crunch may come when HDB owners get their keys to the large number of newly- built condos in locations such as Pasir Ris, Sengkang and Punggol. These areas are less likely to attract the expatriate tenants who offer better rental yields.
Caught between a sub-par rental market and a lacklustre HDB resale market, these property owners may have some tough decisions to make.