The private residential market in Singapore is unlikely to cool in the second half of 2010. Although home prices and property sales in some segments may ease in coming months, many industry experts expressed that the market is unlikely to see a sudden correction.
Several observers said that homebuyers still have excess funds to purchase more units, with many considering property investment as a safe haven nowadays. Market watchers noted that around 600 to 1,000 residential units are likely to be sold each month until end-2010.
While this is less than the 1,000 units sold from January to May, real estate analysts said that this level of demand suggests that the property market remains buoyant.
For 2010, analysts predicted that total sales could hit between 12,000 units to 15,000 units, primarily attributed to the strong sales in Q1 this year. Private home sales recorded 7,666 units sold from January to May, compared to 7,073 units sold over the same period last year.
Analysts also believed that the euro debt crisis will contribute to slower sales in the coming months, compounded by the government’s effort to curb property prices and the mismatch between buyers’ and sellers’ expectations.
"Buyers may factor in the risks in the global market but sellers are not prepared to give that kind of discount, thinking the market will eventually improve," said Mr. Nicholas Mak, a real estate lecturer from Ngee Ann Polytechnic.
Private home prices may increase from 10 percent to 15 percent for the whole 2010. "Developers are not likely to cut prices because they have the financial resources (from earlier strong sales) to hold on to. They also face low holding costs due to the low interest rates," said Mr. Mak.
Prices in the high-end home segment still "have upside potential since they are still 15- to 20-per-cent lower than the peak levels in 2008," said Mr. Donald Han, managing director of Cushman and Wakefield.
Meanwhile, a bumper supply of land for sale in the next six months – four mixed-use sites and 27 residential sites yielding 13,905 residential units – should temper the aggressive bidding among property developers, and could also affect the en bloc market.
"Developers will be spoilt for choice in the Government Land Sales programme, which has a faster process. There is also no complexity arising from litigations as seen in en bloc sales," said Mr. Mak.