With private home prices falling by just two to three percent in H2 2014, it could take another 12 to 18 months of price drops before the government may consider recalling some of its existing property cooling measures, said Steve Melhuish, CEO and Founder of PropertyGuru, in media reports.
“The decline has only been about 2.5 percent in the past six months, (but) home prices in the private space increased about 70 to 80 percent in the past few years, so this rate of decline is not catastrophic,” he said in an interview.
This time frame may seem like a long time, but prices will unlikely slide in just one year and then rebound, considering the private residential market has been growing for five to six years.
Hence, he predicts prices could decrease at a quicker pace in the second half, resulting in an eight to 10 percent plunge by year-end.
“What’s happening now is population growth is not as high as it was, so you see less demand for housing. The cooling measures have also caused a reduction in demand. At the same time, there’s a big pipeline of new projects in 2014, 2015 and 2016, and the unsold properties from the reduction in demand now will add to that supply,” said Melhuish.
Due to these factors, private home prices may decrease be another 10 percent or so in 2015.
“Once there’s a 15 to 20 per cent drop, it’s quite significant. My personal opinion is that that’s when the government will turn things around,” he added.
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
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