The Singapore property market is set for a correction in the following months, say industry players, adding that home prices could hit a plateau and transaction volumes could drop.
According to Singapore Institute of Surveyors and Valuers (SISV), there were 899 caveats lodged for condos during the first three weeks of May. Home sales in the resale or secondary market recently declined by as much as 20 percent, said property agents, though new condominium developments are still performing well.
Buyers are becoming more cautious with regards to the sales figures last month, said Dennis Wee Group.
“Instead of seeing a 30 percent increase in transactions as in the month before, I only saw a marginal 3.5 percent increase,” said Mr. Chris Koh, director at Dennis Wee Properties. “A lot of buyers are pulling their handbrakes. What they feel today is that the seller is asking for too high a price and ‘if I am not in a hurry, why not sit and wait?’”
Industry figures from SISV showed that sales across several districts in the country have dropped as of mid-May. The downtown city area recorded the sharpest drop of 88 percent, while prime districts 9, 10 and 11 saw a 76 percent drop.
Many analysts also expect a five percent to ten percent decline in transaction volumes due to the World Cup.
Meanwhile, ECG Property said it now takes more time to close a deal, which now reaches 80 days from the usual 45 days.
Industry players predict that market correction will last from three to six months, and some also expect a three percent to five percent drop in home prices during this period.
“Some of these prices are over book-keeping value where some banks may not even match some of the asking prices today," said Mr. Eric Cheng, CEO of ECG Property. “That also shows that these prices could be a speculation price instead of a true reflection price. I think the market is going through a slight correction.”
Prices may also be capped by more land supply that will be released by the government, said analysts. Among the other risk factors are the European debt crisis and volatile stock markets.