Triple threat forces developers to slash home prices

Mass market prices will dip the most.

Rising vacancy, a ballooning inventory, and normalizing interest rates will drive developers to further slash home selling prices.

Analysts from Maybank Kim Eng noted that mass market home prices are more vulnerable to a steep correction as prices have only corrected by 5.2% from their last peak. Mass-market home prices have surged by a staggering 74.9% from their last bottom in 2009.

“In contrast, high-end home prices in CCR had increased by a much smaller 48.9% and corrected by a more significant 7.5%," Maybank Kim Eng said.

Meanwhile, the Real Estate Developers' Association (REDAS) warned of a possible downward spiral in home prices on back of record-high vacancy if cooling measures are not lifted.

“Augustine Tan, President of the Real Estate Developers’ Association (REDAS), warns of record-high vacancies in the private residential market. He believes that rising vacancy would precipitate further declines in rents and selling prices,” the report added.