Private home prices set to continue downward trend: Analyst

Private home prices in Singapore are expected to ease for a few more quarters and according to a property analyst, that is because loan curbs – including the total debt servicing ratio framework that was introduced in 2012 – would continue to cool home buying interest.

Numbers from the Urban Redevelopment Authority (URA) show that for the whole of last year, private home prices fell 4 per cent.

Mr Getty Goh, director of Ascendant Assets, said: “Looking at some past trends, the downward trend or lacklustre markets have lasted for as long as two to three years, so all things considered, we are probably in the midst of it.

“Prices will continue to go down in the next couple of quarters, and it could continue to go down for the next one to two years, or at least it will stagnate and will not go up, which means to say that the good old days of having price appreciation of a few per cent in a single quarter will not be coming back anytime soon.”

Speaking to investors at a business outlook forum on Friday (Jan 9), Mr Goh added that the lengthiest downtrend in the Singapore property market was from the period stretching from the third quarter of 2000 to the first quarter of 2004.

The outlook for this year remains cloudy, in view of the impending US rate hike and political developments in Europe – such as the elections in Greece and the UK. Analysts said that rising interest rates could depress market sentiment if the pace of increase was too fast.

They also warned about the impact of a weakening Singapore dollar. Mr Kelvin Tay, regional chief investment officer for Southern Asia Pacific at UBS AG, said: “The other factor to look out for is the Singapore dollar – where is it going to go? We think the MAS in April will try to gradually weaken the slope a little bit and re-centre the mid-point of where the NEER (Nominal Effective Exchange Rate) is.

“That basically means there is scope for the Singapore dollar to weaken a little bit more. That in turn means that businesses in Singapore will have to consider hedging their cost if they think the Singapore dollar is going to weaken considerably.”

Source : Channel NewsAsia – 9 Jan 2015

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