What real estate players have to say about the slump in home prices

Home prices dropped 0.5% in the first quarter.

Real estate players are on the positive side with the past quarter’s 0.5% drop in home prices.

ERA key executive officer Eugene Lim said this marks the 14th consecutive quarter of price decrease in the private property market, citing the 2.8% fall in landed property prices as the main reason. In comparison, non-landed property prices were quite stable, with properties in the CCR, RCR, and OCR registering price changes of -0.2%, 0%, and +0.1%, respectively.

“As the lending rules and Additional Buyer's Stamp Duty (ABSD) have not changed, buyers prefer lower price quantum properties than higher ones. The private residential market has been pretty buoyant in 1Q17, with there being 2,854 new sale and 1,768 resale caveats lodged from January to March,” explained Lim, noting that this is already 62.3% higher than the 2,847 transactions in 1Q2016. He said the market is off to a good start this year.

“The government has recently announced a tweak to the Seller’s Stamp Duty, and this has been seen as an indication that the government is finally starting to relax some of the property cooling measures. This has increased the optimism amongst those buying properties today; as the holding period is now shorter at 3 years,” noted Lim.

PropNex CEO agrees to this, saying, “The consistent drop of 0.5% in the two quarters signifies the consolidation in the property market. The recent adjustments to cooling measures, though not significant, is a great boost in terms of market sentiments. We expect prices to drop by 2% overall in 2017 as compared to -3.1% in 2016.”

Meanwhile, Ong Teck Hui, national director of Research & Consultancy at JLL, said the positive buying sentiments seen in the first quarter will likely continue with the market remaining upbeat.

“Healthy sales volume would eventually lead to prices stabilising especially in the non-landed market although short-term fluctuations in the indices may be expected. The recent imposition of Additional Conveyance Duties (ACD) could result in developers offering further discounts to clear unsold stock. It remains uncertain as to how this could protract the turnaround in prices,” he said.

Regarding the 2.8% decrease in landed property prices, Ong noted this implies that the sub-market is still softening. “The high absolute prices of landed homes remains a challenge in the current market which has trended towards an affordability play with smaller size non-landed units in greater demand.”