Here's why property prices remain elevated despite several cooling measures

Developers won’t budge for as long as they can.

Why have several rounds of cooling measures only managed to bring about a very modest drop in residential property prices? According to Han Huan Mei, Associate Director for Research at CBRE, the answer lies in Singapore’s sound economic fundamentals and developers’ power to hold prices in spite of a double-digit decline in sales volume.

“Home prices have seen only modest corrections, however, resulting in the government’s unwillingness to relent on property measures. CBRE Research is of the view that developers are prepared to continue to hold prices as much as they can even as sales volume continues to fall,” Han stated.

She noted how the threshold for new homes has been maintained at around $1 million for new homes, even while the median size of new homes has dropped from 1,195 square feet in 2009 to $753 square feet in 2014.

“Has affordability improved? Only marginally. The market is stronger now because the measures have helped to ensure the credit-worthiness of buyers. Going on to 2015, CBRE expects home sales volume to be similar to 2014 while home prices are likely to see modest corrections until they reach an equilibrium,” she wrote.