DBS forecasts 5% drop in property prices this year

Developers to remain cautious.

January’s total primary private home sales were up 0.4% m-o-m to 2,269 units.

However, excl ECs, take ups surged 43% m-o-m to 2013 units, the highest in terms of volume of transactions in 4 months and 6% higher than the
average monthly average last year, said DBS.

"The strong demand was recorded on new offerings largely in the first half of the month (prior to the government’s cooling measures) while subsequent aggressive marketing and promotion activities by developers in the form of price discounts and rebates after the cooling measures also
led to continued interest. "

Mass market housing in the Outside Central Region (OCR) and smaller sized units continued to contribute the bulk of sales, accounting for 64% while the Core Central Region (CCR) garnered a 17% market share and Rest of Central Region (RCR), the remaining 19%. The bulk of sales
came from La Fiesta, Q Bay Residences and D’Leedon.

DBS notes that the market should expect a quieter February, maintain projection for a 5% drop in prices.

"Going into February, we expect primary home sales to slow down during the Lunar New Year. In the light of a policy driven environment, we expect developers to remain cautious post the latest round of measures and are likely to time their launches to market and continue to provide attractive discounts and rebates. This will likely cap upside to prices. As such, we continue to maintain our projection for a 5% drop in private home prices this year."