Singapore luxury home prices to dip 0.5%

Expect a 'mixed bag’ of price trends, says anlayst.

According to Knight Frank, the high-end segment could see slowing price declines by around 0.5 percent q-o-q, as developers are likely to hold their prices without significant adjustment, given the location exclusivity of their projects.

Here's more:

Taking into consideration the government’s close watch on the property market and the ample pipeline supply of private homes and HDB flats, a moderation in the housing market in terms of sales volume is expected in 2014.

Despite a challenging 2H 2013, selected new project launches by reputable developers at good locations with sensitively priced offerings will continue to do well.

We could see a ‘mixed bag’ of price trends for different market segments in 1Q 2014. Amongst the various market segment, high end and mass market residential prices are expected to see slight declines.

Mass market segment is expected to be more competitive given the continuous supply of GLS land sites in the last few years, including higher supply of Executive Condominium units.

The falling Cash-over-Valuation of HDB resale flats may have a consequent impact on demand for mass market homes, as HDB upgraders would have less returns to upgrade to private property.

As such, mass market home prices in the OCR is likely to see a modest price decline of 0.3 per cent to 0.5 per cent q-o-q for the same quarter, as developers are faced with the challenge of pricing their projects ‘right’, while maintaining their margins with higher land and construction costs.

Conversely, there exists some potential in the mid-tier segment, given thesuperior locations of RCR projects compared to suburban areas, and the narrowing price gap between mass market and mid-tier private homes.

Mid-tier home prices in the RCR could see further upside with modest price increase of about 0.2 per cent q-o-q in 1Q 2014, in view of upcoming new project launches at good locations.