Analysts expect property prices to soften in 2012

The Singapore private residential property market was hit with two rounds of cooling measures in 2011 – moves widely described by analysts as harsh.

Coupled with an expected slowdown in the global economy, home-buying decisions may stall in 2012.

And developers may also roll out more incentives to prop up sales.

Despite the uncertain economic outlook in 2011, home-buying interest remained healthy judging by the long queues at recent property launches.

Analysts expect new private homes sales to hit a total of 15,000 to 16,000 units this year, compared to nearly 16,300 units sold in 2010.

Next year, crowds at property launches could get thinner as weak economic sentiment undermines the confidence people have in keeping their jobs.

Sales volume for 2012 is likely to dip further to under 14,000 units for the whole year.

Dr Chua Yang Liang, Research Head, Jones Lang LaSalle, said: “If the transaction volumes were to declined and sustained into 2012, then prices are expected to be affected. From our forecast we think possibly between 10 to 15 percent on the downside.”

Analysts say there is no chance of recovery for high-end property next year, with prices likely to slide 20 per cent.

The sale of high-end units was already lacklustre before the government imposed an Additional Buyers’ Stamp duty in December, which will further dampen demand from foreigners.

Market watchers expect some diversion of investor interest from residential, to other real estate including office and strata industrial properties.

Meanwhile, the cheaper home loans and genuine latent occupier demand are expected to continue to drive the mass market home segment.

However, prices for such homes could see a downward correction of about 10 per cent next year

To mitigate the impact of the cooling measures, experts say developers are likely to dangle a carrot in front of home buyers.

Chia Siew Chuin, Director, Research & Advisory, Colliers International, said: “They may have to even align their prices to move the sales or even look at incentives, soft sale kind of measures, probably extending rebates in the sense of discounts or even absorbing stamp duty on behalf of buyers or extending other kinds of incentives not only to buyers but also to agents to help them move sales.”

Developers will also continue to launch new projects, especially those in the suburban areas.

Donald Han, Vice Chairman, Cushman & Wakefied, said: “We will continue to see more launches coming up for mass market, mainly because the government sales of sites that have been launched in the last 24 months…a record number of over 20 sites will have to come into the market. They (the developers) have to do it now as these are on 99-year leases, unlike the high-end or mid-end projects which are traditionally freehold projects having a longer tenure life.”

Analysts say developers will also be more measured in their land bids next year, and prices for sites that are less attractive could dip by some 10 to 12 per cent.

Source : Channel NewsAsia – 14 Dec 2011

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