Residential home prices is forecasted to dip ten to 15 percent over 2015 to 2016, according to OCBC Investment Research in a recent report.
Primary residential sales in 2015 is also expected to stay muted at between 8,000 to 10,000 units sold.
“A heavy physical oversupply situation ahead, coupled with anticipated interest rate hikes from the Fed in H2 2015, will likely keep buyers on the back foot going forward. That said, a price crash in excess of 20 percent is improbable, in our view, given the high price elasticity of demand in the housing market; that is, we will likely see significant buyer demand coming into the market at lower price points.”
While the Total Debt Servicing Ratio (TDSR) framework is likely to stay, the report indicated other measures such as the Sellers’ Stamp Duties (SSD) and Additional Buyers’ Stamp Duties (ABSD) may be reviewed if the authorities potentially look to reverse curbs ahead. “However, this scenario comes into play only when residential price declines approach a meaningful threshold of ~10%, which could happen by H2 2015 or after,” OCBC Investment Research said.
The report also predicts prices in the mass-market segment to be more at risk versus the mid-tier and high end. Additionally, shoebox units are likely to be more at risk versus larger format units.
Muneerah Bee, Senior Journalist at PropertyGuru, wrote this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
