Correction expected in Singapore’s property market: industry players

Industry players have said Singapore’s property market is in for a correction in coming months.

Tell-tale signs include a plateau in home prices and a drop in transaction volumes.

The Singapore Institute of Surveyors and Valuers said there were 899 caveats lodged for condominiums in the first three weeks of May.

This compares with 3,060 for the whole of April.

New condominium projects are still doing well. But property agents said home sales in the secondary or resale market have dropped by up to 20 per cent recently.

Dennis Wee Group said buyers are becoming more cautious, going by sales figures in May.

Chris Koh, director, Dennis Wee Properties, said: “Instead of seeing a 30 per cent increase in transactions as the month before, I only saw a marginal 3.5 per cent increase. A lot of buyers are pulling their handbrake, what they feel today is that the seller is asking for too high a price, and if I am not in a hurry, why not sit and wait.”

Industry data from the Singapore Institute of Surveyors and Valuers showed sales falling across various districts as of mid-May.

The prime districts of 9, 10 and 11 recorded a 76 per cent drop, while the downtown city area saw the sharpest decline of 88 per cent.

Analysts also expect transaction volumes to fall by 5 to 10 per cent due to the upcoming World Cup season, which begins on June 11.

Meanwhile, ECG Property said it now takes longer to close a transaction. It was about 45 days before, but it takes up to 80 days now.

Industry players expect the market correction to last between three and six months, and some said home prices could trend down by 3 to 5 per cent on average during this period.

Eric Cheng, CEO, ECG Property, said: “Some of these prices are over book keeping value, whereby some banks may not even match some of the asking price today. That also shows that these prices could be a speculation price instead of a true reflection price. I think the market is going through a slight correction.”

Analysts said prices may also be capped by more land supply due to be released by the government.

Other risk factors include volatile stock markets and the European debt crisis.

Source: Channel News Asia, 9 Jun 2010