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PRIVATE home prices registered the smallest quarterly decline in more than two years in the fourth quarter of 2015, which some consultants see as a sign of a future soft-landing and another justification for the government to keep the cooling measures in place for now.
The 0.5 per cent quarter-on-quarter decline in the Urban Redevelopment Authority's (URA) flash price index for private residential properties in the fourth quarter brought the full-year fall to 3.7 per cent, following a 4 per cent drop in 2014.
This ninth consecutive quarter of decline makes for a 8.4 per cent drop from the peak in Q3 2013. The continued fall in private home prices came against a 0.2 per cent rise in HDB resale prices in the fourth quarter, the first uptick in 10 quarters.
ERA Realty's key executive officer Eugene Lim said: "This increased price stability could be pointing to a new equilibrium, indicating that the market may have found its footing."
Century 21 Singapore CEO Ku Swee Yong said Q4 private home prices, when viewed in conjunction with HDB resale prices, suggested that the market was turning the corner, "so there are fewer reasons for lifting the cooling measures". He added: "The price decrease is still within acceptable limits. There's no risk to the real estate or finance market and hence, the cooling measures will stay for longer."
National Development Minister Lawrence Wong told reporters last week that the property market was "on track for a soft landing" and that it was still not time to unwind cooling measures.
Based on URA's fourth-quarter flash estimates released on Monday, prices of landed properties fell 2.1 per cent in the quarter, against the 0.4 per cent decline in the quarter before, bringing the full 2015 fall to 4.4 per cent.
Ong Teck Hui, JLL national director for research and consultancy, noted that the price index for landed properties declined by 10.4 per cent from the peak in Q3 2013, compared to a 7.6 per cent fall in the non-landed price index in the same period, showing that the cooling measures hit the more expensive landed property market harder: "Due to higher-quantum loans required for pricier landed homes, their affordability has been adversely affected by the cooling measures, including the total debt servicing ratio (TDSR)," he said.
Prices of non-landed private homes slipped 0.4 per cent in the Core Central Region (CCR) in the fourth quarter, after shedding 1.2 per cent in the third quarter. Prices in the Rest of Central Region (RCR) and Outside Central Region (OCR) remained unchanged, following a 1.6 per cent fall each in the previous quarter.
For the whole of last year, the biggest price drop for non-landed homes took place in the RCR (3.9 per cent), followed by OCR (3.7 per cent) and CCR (2.6 per cent).
PropNex CEO Mohammed Ismail attributed the relative resilience in the CCR region for the year to affluent buyers having greater holding power and taking time to identify their next investment properties - including overseas properties.
The softening of HDB resale prices pared HDB flat owners' motivation to upgrade to mass-market properties, he said, noting that buyers are finding greater difficulty in purchasing private homes costing more than S$1.3 million, with the lending curbs.
Mr Ong, holding a different view, said that as HDB resale prices continue to stabilise, HDB owners will become more confident about upgrading to private condominiums, which will in turn lend resilience to prices of suburban private homes.
URA's flash estimates are compiled based on transaction prices stated in contracts submitted for stamp duty payment and survey data on new units sold by developers in the first 10 weeks of the quarter; the statistics are updated four weeks later.
Projections by property consultants for private non-landed residential price movement this year range from flat to a negative 15 per cent.
At the most bullish end of the spectrum, Savills research head Alan Cheong even flagged the possibility of an inflexion point in prices happening this year; resale transactions, which he believes to be the main drag on price indices, will to recover "decisively" to between 8,000 and 9,000 this year, from the estimated 6,500 to 7,000 last year.
"If you look purely at prices, it seems to be an ideal state for policy makers (giving them little reason to tweak cooling measures)," he said.
But Mr Ismail believes that the private resale market will continue to face stiff competition from new projects by developers, while dealing with a more discerning group of potential buyers who are taking a longer time to decide on private-home purchases. "This may put a fair bit of pressure on sellers in the resale market, who may have to lower prices in order to make a sale."
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