Private home prices fell by 1.3 percent in the first three months of 2014, following a 0.9 percent drop in the previous quarter, revealed latest data from the URA.
This is the second consecutive quarter of decline and also the biggest drop since Q2 2009.
Prices tumbled in all segments of the market. Mass market home prices in the Outside Central Region (OCR) decreased for the second straight quarter by dipping 0.1 percent; Rest of Central Region (RCR) prices fell 3.3 percent – reversing a 0.4 percent gain in Q4 2013. Finally, high-end properties in the Core Central Region (CCR) fell for the fourth consecutive quarter as it dropped 1.1 percent.
According to PropNex Realty, the price decline is in line with slower transaction activity in both the primary and secondary markets as the existing cooling measures continue to bite, particularly the Total Debt Servicing Ratio (TDSR) framework.
“By now we are convinced that the private residential market has turned the corner and is entering into a consolidation phase with reduced transactional activity and prices under pressure,” said Mohamed Ismail, CEO of PropNex.
He added that declining HDB resale prices may have deterred some sellers who were looking to sell their flats and upgrade to a private property.
“The smaller gain achieved from the sale of their HDB flat will limit their budget for their new private property and may cause many to put their plans on hold because the potential profit is insufficient to allow them to upgrade.”
Moving forward, Ismail expects overall price weakness to persist if the current policies stay in place, and prices could decline by about four to five percent this year.
“It may be timely to adjust some of the cooling measures – especially the ABSD (additional buyer’s stamp duty), in order to ensure a sustainable growth of private property prices in the long term,” said Ismail.