High-end and mid-tier markets face tough year: Colliers

After new home sales dropped 63 percent in December, property firm Colliers International predicts a challenging year for the market across the price spectrum.

It noted that mid-tier to high-end segments will see a decline in foreign buyers, as many of them have been driven out by the additional buyer’s stamp duty (ABSD) measure.

“Although the low interest rate environment could continue to support home buying in 2012, mounting downside risks are expected to weigh down demand for homes and weaken prices,” it said.

It added that the imposition of the ABSD will “shave off some level of buying demand”, particularly from foreigners.

“All these could drag down demand further as prospective purchasers continue to adopt a cautious stance and hold out for possible price declines. Thus, take-up for new homes in 2012 could potentially drop to between 9,000 and 11,000 units from 2011’s 16,027 units.”

Meanwhile, Colliers expects the mid-tier and high-end markets to be hit harder.
“This is in view that foreign buyers currently form a major demand base of buyers for private home sales in these segments and they are likely to be deterred by the imposition of the ABSD to some extent.”

Although there is demand from genuine and first-time buyers in the mass-market segment, Colliers said the grim market outlook and lower job prospects as well as the abundant land supply in the pipeline from the 1H2012 Government Land Sales (GLS) Programme for residential property development could stall buying decisions.

Source : PropertyGuru – 20 Jan 2012

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