Everything must go: Home prices to plummet by 20% in 2015

Brace yourselves for the big crash.

Homebuyers searching for cheaper houses will only need to wait a little longer. A significant drop in home prices is on the horizon, as residential prices are predicted to dip 10-20% over 2014-2015.

According to OCBC, demand is mounting for residential homes but buyers remain highly price-sensitive. .

“We forecast residential prices to dip 10%-20% over 2014 – 2015 but see a price crash in excess of 20% to be unlikely, even after accounting for the anticipated physical over-supply and interest rate uptrend ahead,” noted OCBC.

Here’s more from the report:

One key argument against a crash is that we believe there is a high price elasticity of demand in the market largely due to a prolonged period of physical undersupply from 2004 – 2012.

Simply put, significantly more buyers will likely come into the market at lower price points, which will slow the rate of decline as prices soften.

Several key data-points had previously corroborated our view – firm sales at d’Leedon and Sky Habitat after significant discounts by CapitaLand, and at attractively priced launches such as UOL’s Thomson Three – and we believe the latest set of sale figures in May-14 further supports this.