From luxury to mass market: All home property will fall

No segment will be spared in the approaching 2012 demand drought, says Colliers.

After December 2011 saw a shocking 63% decline in private residential homes, the property brokerage predicts a year of hurt for property across the price spectrum.

High-end to mid-tier segments will see a trickle of foreign buyers, many of which may have been repelled by the ABSD measure, while mass-market segment suffers from oversupply.

"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," said Colliers International in a release.

"The slowing global and domestic economies are likely to affect employment prospects and salary growth and this is expected to ruffle homebuyers’ confidence and dampen demand. Additionally, 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," it said.

"The high-end/luxury and mid tier markets which are already slow in sales activity are expected to be harder hit. 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," Colliers added.

"In the mass-market segment, although there is demand from genuine and first-time buyers, the grim market outlook and job prospects as well as the abundant land supply in the pipeline from the 1H 2012 Government Land Sales programme for residential property development could stall buying decisions," it said further.