OCBC predicts posh home prices to drop 5-10% in 2014-2015

Mass market home prices to drop too.

OCBC forecasts mass-market and high-end home prices to dip 10%-15% and 5%-10%, respectively, over FY14-15. 

Over 1Q14, URA flash estimates for the private residential property index showed a 1.3% decline, indicating downward price momentum after a 0.9% dip in 4Q13.

Here's more from OCBC:

The weakness was fairly broad-based, with prices in the Outside Central Region (mass-market), Rest of Central Region (midtier) and Core Central Region (high-end) falling 0.3%, 2.8% and 1.3% respectively.

Also, we note primary transactions over Jan-Feb 2014 has fallen 56.7% YoY, highlighting difficult conditions for developers as buyers’ demand were curtailed by loan restrictions and weaker price expectations.

Finally, we also expect pressure on rental rates ahead as the physical market heads deeper into an over-supply situation; note that island-wide vacancy rates had increased 1.0 ppt from 5.2% to 6.2% from 1Q13 to 4Q13.