Fears escalate in Singapore's housing market as prices continue to drop

It has hit its steepest decline of 1.5% since 2Q09.

While there is an improvement seen in the take-ups of new launches, the housing market remains in correction as private residential property prices continue to spiral down.

According to Cushman & Wakefield's Research Director Christine Li, the 1.5% contraction in prices in 3Q16 reflect that the market is being pressured.

"The market is finally feeling the brunt of the economic slowdown as well as the downward pressure from the supply spike in 2015-2017," she said.

Li noted that the decline in the said quarter is pronounced across all markets and is the steepest drop since the second quarter of 2009, where prices declined by 4.7% QoQ.

Meanwhile, the analyst argued that the drop in prices of private residential properties in Core Central Region (CCR) reflects the recent changes adopted by Urban Redevelopment Authority to include the net prices for delicensed units sold.

"This has indeed affected the computation of the CCR prices, which indicated a decline of 1.8% Q-o-Q compared to an increase of 0.3% in 2Q16. This is also the biggest decline since 4Q2013,"she said.

She also took note that the demand for prime segment is also languishing in the face of weak leasing market.

In addition, landed property saw a steeper price drop of 2.2% QoQ compared to 1.5% contraction in the previous quarter.

"The anticipated slower GDP growth coupled with stringent loan criteria for large quantum purchase does not bode well for landed property," Li stressed.