Potential sellers unlikely to lower price expectations

Prices of private homes in Singapore continue to cool but at a slower pace as shown by Urban Redevelopment Authority (URA)’s flash estimate for Q3 2014.

According to Colliers International’s Director of Research and Advisory Chia Siew Chuin, many sellers are not in any urgent need to dispose their properties as many have already gained from earlier property trades. Some may even be still sitting on paper profits if they made their investments in the earlier up-cycle.

“Many owners of private residential properties today have benefitted from the robust capital appreciation since 2005. Except for the short blip during the global financial crisis, which did not take long to recover, property owners/investors have generally enjoyed more than attractive profits in the last nine years or so,” she said.

As potential sellers expect there is still some time before interest rates increase, and due to their current financial muscle, they are unlikely to lower their price expectations. At the same time, these sellers are likely to time their exit in order to minimise or to avoid paying Seller’s Stamp Duties (SSD).

Additionally, developers have enjoyed the gains in the residential property price run-up from 2005. Chia said, “With the amount of profits made during the boom years, some of them have the financial power to maintain current prices or else offer moderate discounts. Potential buyers are well aware of the current downtrend in prices and they refrain from making purchases now, in expectation of even lower prices in the near term.”

These factors explain this price stalemate in the current market, she said, as reflected in URA’s latest flash estimates.

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