Prices of luxury homes in Singapore dropped 1.7 percent in the second quarter, attributed to tight competition from new buildings in non-core locations, according to CB Richard Ellis’ (CBRE) latest report.
It noted that while prices of luxury homes continue to fall slowly, other segments are expected to remain stable.
In addition, luxury home rentals fell 1.9 percent quarter-on-quarter, primarily due to the huge stock of projects completed and which are currently available for rent.
Meanwhile, rising interest rates and tightened mortgage lending continued to affect buyer demand in most Asian markets in Q2 2011.
The CBRE Asian Luxury Residential Capital Value Index jumped 2.5 percent in Q2, compared to an increase of 5.5 percent recorded in Q1.
“Interest rate hikes, tightening credit availability and general uncertainty over the global outlook are all beginning to impact on Asia’s residential market. Whilst luxury residential sales are less affected by some of these issues than other segments of the market, rising concern over the outlook for prices is likely to deter some speculative investment with a consequent impact on trading volumes and value growth,” said Nick Axford, Executive Director and Head of CBRE Research, Asia Pacific.
“Whilst the medium term fundamentals for the sector remain healthy, the ongoing volatility in the global environment and concerns over the short term outlook could have a softening effect on the market in the coming months.”
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