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MOST property market watchers expect private home prices to continue slipping in the single-digit percentage range this year, following the 4 per cent full-year drop last year, although much will depend on when and how the government starts to roll back some of the cooling measures and how interest rates pan out, among other factors (see infographic).
Last year's 4 per cent drop in the widely-watched overall private residential property price index of the Urban Redevelopment Authority (URA) factored in a one per cent quarter-on-quarter decline in the fourth quarter, reflected in Friday's flash estimate, and marked the first full-year decline in the index after five consecutive full-year rises. In 2008, the index fell 4.7 per cent.
From its global crisis trough in Q2 2009 to the recent peak in Q3 2013, the benchmark index rose 62.3 per cent.
Price declines from that peak induced by the rollout of the total debt servicing ratio (TDSR) framework in late-June 2013 have been relatively mild.
JLL national director Ong Teck Hui said: "A lot of developers have been holding back on launches and avoiding substantial price discounts - in anticipation of a relaxation of cooling measures.
"Going ahead, we are likely to see more flexibility on pricing from sellers. The softening rental market will also affect the loan repayment for some investors and that will lead to some pressured selling in the secondary market."
The one per cent dip in the Q4 2014 flash estimate for URA's overall private home price index was the fifth consecutive quarter-on-quarter decline; the 4 per cent full-year drop contrasted with a 1.1 per cent rise in 2013.
URA's flash estimates for Q4 non-landed private residential properties by geographical regions showed that prices in the city-fringe or Rest of Central Region (RCR) posted the biggest full-year decline of 5.2 per cent.
In 2013, the decrease was just 0.1 per cent.
In the Core Central Region (CCR), prices shed 4.1 per cent in 2014, after easing 1.9 per cent in 2013. CCR covers the Downtown Core planning area, Sentosa and the traditional prime districts 9, 10 and 11.
Suburban locations, or Outside Central Region (OCR), recorded the mildest price erosion - 2.2 per cent last year. In 2013, the sub-index for this region had gone up 6.5 per cent.
Mr Ong said: "OCR has held up as the most resilient sub-market as it has relatively better fundamentals, being supported by upgraders and having more affordable prices."
URA's price index for landed homes fell 1.1 per cent quarter on quarter in the fourth quarter, a smaller depreciation than the 1.8 per cent drop in Q3. Full-year, the landed index was down 5.2 per cent after having remained unchanged in 2013.
The declines in prices of private homes last year were due mainly to the lingering effects of the cooling measures and TDSR framework, which weakened buying demand, especially investment demand, said SLP International executive director Nicholas Mak.
Singapore's slow economic growth rate was also a dampener.
South-east Asia head of CBRE Research Desmond Sim said: "We expect the current market sentiment to prevail in 2015. Developers will monitor the market and price units at affordable levels, applying the same approach that they used for the past few quarters."
Many property consultants expect developers' sales of new private homes (excluding executive condos) to languish at around 7,000 to 8,000 units this year.
The estimate for 2014 was around 7,300 to 7,500 units - half the 14,948 units sold in 2013, which in turn was a big drop from the record 22,197 units in 2012.
SLP's Mr Mak forecasts developers' sales of between 7,000 and 9,000 private homes this year, assuming no change in housing policies.
"However, sales volume could exceed 9,000 units and potentially touch 11,000 units if the authorities were to lighten the current property curbs," he said.
Private home transactions in the secondary market were also quiet last year.
Colliers International director Chia Siew Chuin's preliminary analysis shows that 4,701 private homes changed hands in the resale market in 2014, based on caveats data as of Friday, down from 6,678 units in 2013 and 13,214 units in 2012.
Subsales also dwindled to 528 units last year from 1,102 units in 2013 and 2,462 units in 2012. As a result, total island-wide private home transactions in both primary and secondary markets are estimated to have shrunk to nearly 12,400 units last year, from 22,728 units in 2013 and 37,873 units in 2012.
Savills Singapore research head Alan Cheong warned that ". . . if activity continues to shrink and with the economy still growing in a low-unemployment environment, strong holders will not give in to even marginally lower asking prices".
He added: "So what's left over will be an increasing number of forced-sale properties. Once the latter starts to build in numbers, the price index could suddenly tip over and collapse."