Private home prices in Singapore seen to slip 5%

Home-buying sentiment turns extra cautious.

According to Colliers International, overall private residential property prices are expected to at most slip by 5% in 2014, following 2013’s moderated 1.2% increase.

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Looking ahead, the private residential market which has enjoyed a good run of demand driven by local buyers is likely to approach Year 2014 on a more tentative note as home-buying sentiment turns increasingly cautious.

Although another wave of activity is expected in light of more offerings in the pipeline, the various government measures have effectively curtailed demand from all groups of homebuyers. Not only have selected groups of buyers been sidelined by financing rules under the TDSR, the budgets of eligible buyers have also been trimmed.

Additionally, demand from upgraders from the Housing and Development Board (HDB) market will also continue to be affected by declining resale prices of HDB flats. Would-be buyers will also be concerned about increases in interest rates.

With various checks and balances in place, transaction volume in the primary market is expected to moderate to around 12,500 to 14,500 units in 2014, lower than the 15,015 units sold in 2013. As the potential pool of buyers shrink and developers face stronger competition for the consumer dollar, prices are expected to come under some pressure.

This could be exacerbated by the sizeable residential supply that will come on-stream, turning the market in favour of homebuyers. The general expectations among buyers for a price correction are also likely to keep prices in check.

Nonetheless, projects which are reasonably-priced and well-located will continue to find favour with homebuyers. Furthermore, Singapore’s private residential market will remain supported by the expected continued economic expansion in 2014, albeit at a modest pace, as well as positive employment prospects.