Singapore private property prices decline for the first time since 2008

According to data released by URA on 23 January 2015 for 4th Quarter 2014, the prices of private properties declined by 4% for the year of 2014 as a whole, compared to an increase of 1.1% in 2013. The report also highlighted that there were price decrease across all segments of the private residential property market, including the central region, which seen drop of 0.9%.

Source: URA

The current market trend is in line with what most analysts predicted last year and the market mood is expected to continue to be sour moving forward. With the slew of cooling measures firmly in place, many property investors are still adopting a wait-and-see approach. Because of this, for the whole of last year, developers sold 7,316 units, a figure much lower than the 14,948 units sold in 2013.

Source: URA

To make matter worse, if we include the 14,220 Executive Condominium (EC) units in the pipeline, there would be a total of 83,180 units in the pipeline. Also, based on the completion dates reported by developers, about 24,796 units (including ECs) will be completed this year and another 25,717 units (including ECs) are expected to be completed in 2016. Clearly, the data indicated that the supply is outstripping the market demand since 2010 as reflected below.

Source: URA

My view is that prices would still continue to decline gradually by 5-7% until end of this year. Even so, this does not mean that this is a buyer’s market because most developers did not slash prices and the additional stamp duty, coupled with the Total Debt Servicing Ratio (TDSR) Framework, continue to put off investors. So it is a stalemate for both investors and developers. Unless developers “price to sell” their projects, they may face difficulties in attracting serious buyers or investors to the market.

Magically yours,

SG Wealth Builder