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Analysts: Property Prices To Fall 10% In 2H15
Aspire, Investments | 06 May 2015
By: Vance Wong
Articles (74) Profile

iProperty.com recently released a sentiment report on Asia’s property market for the first half of 2015. Analysts are expecting Singapore property prices to slide further in this coming year, somewhere between 4.5 to 8 percent.

This is largely due to the recent contraction of property prices and volume as a result of the cooling measures imposed by the government. Prices in the private property market have been dropping for the past nine months and the approximate total drop is about three percent.

Home Ownership Falling; HDB Owners Decreasing

According to iProperty.com, although overall home ownership is still high at 89 percent in 2012/2013, it decreased from 91 percent over the past decade. Overall HDB flats ownership decreased while overall condominium and landed properties ownership increased.

Source: iProperty.com

In a survey conducted by iProperty.com, 66 percent of the respondents think that HDB resale prices are still unaffordable. The prices of resale flats in most of the regions in Singapore are dropping but average Singaporeans are still unable to afford them.

This is despite the fact that the HDB Resale Price Index fell by six percent Year-on-Year (YoY) from 145.8 back in 2013 to 137.0 in 2014.

Property Prices To Dip In Next Half-Year

Source: iProperty.com

Half of the respondents of iProperty.com’s survey think that property prices will drop further in the next six months. This could largely be because of the rising interest rates for loans. Furthermore, the prices of private property have fell four percent so far this year, pointing towards a generally bearish sentiment of the property market currently.

The survey has also reflected that the reduction of the Mortgage Service Ratio (MSR) has affected Singaporeans’ housing budgets and their ability to buy properties. It restricts the amount of income one can use to service a housing loan, which would possibly have an negative impact on prices.

Source: Straits Times

In addition, ANZ analysts think that prices in the private residential market will fall up to ten percent this year. For instance, it was reported by Straits Times that a Sentosa Cove private condominium unit was sold at a $1.2 million loss, making it the “cheapest transaction” and “steepest loss” in Singapore in recent years.

We also note that analysts feel that investors should try to shy away from resale HDB flats, taking into consideration that despite the falling prices, primary launches are offering more attractive prices than resale markets.

What Investors Can Do Now

Savills’s analysts predicted in their report that the Singapore’s private residential market is expected to remain soft in 2015.

As such, for investors that are looking at attractive properties, this year might be a good time to source for attractive entry points, especially when the market’s supply will start to glut.

With a Communications background, Vance has the passion to write with a purpose - to provide content supported with substantial evidence to vested readers.

Please click here for more information about this author.


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