LUXURY home prices in the world's leading cities rose an average of 4 per cent over the 12 months ended September 2014 but the outcome was starkly different in Singapore, where prices plunged the most: 10 per cent.
Singapore was one of seven cities out of 33 that saw prices for high-end homes fall over the one-year period, according to Knight Frank's latest Prime Global Cities Index report.
None of the other cities saw prices drop as much as in Singapore. In Hong Kong, prices in the luxury homes space slipped 1.1 per cent while the other cities (all in Europe) saw prices dip 2.5-8.7 per cent with the weak macro backdrop.
Home prices in Singapore are falling on the back of protracted property curbs aimed at stabilising real estate prices - which had risen some 30 per cent over the last five years before the curbs kicked in.
"The muted sentiment in Singapore's luxury residential market remains inherent with falling transaction volumes and buyers anticipating further price adjustments," said Alice Tan, Knight Frank Singapore's director and research head.
While some home owners have lowered their asking prices due to the softening market, others are holding out for more given the "exclusivity" of their assets and expectation that things could improve with Singapore's long-term prospects, she said.
In the US, all four cities included in the index - Los Angeles, San Francisco, Miami and New York - saw annual prices rise between 6.7 and 16.3 per cent, positioning them in the top 11 rankings for annual growth.
The disparity with Europe's cities is stark. Luxury home prices rose 10.5 per cent on average across North American cities over a 12-month period compared with an average of only one per cent across European cities.
The index - which tracks movement in luxury residential prices to help investors and developers monitor and compare the performance of prime residential prices across key global cities - also discovered that prices in the prime residential space rose a meagre 0.2 per cent in the quarter ended September. This would be the index's weakest performance in two years. Here, too, Singapore underperformed, with prices falling 4.1 per cent over the period.
Ms Tan said transaction volume in Singapore is likely to be thin in Q4 with the year-end holiday season. She expects average prices to moderate over this period with a 3-5 per cent decline on a quarterly basis.
According to the report, the overall moderate increase in prices over the quarter was partly due to the fact that the third quarter (for much of the world at least) is dominated by the summer break, which often sees sales activity click at a lower pace.
Despite the prime index's muted performance in Q3, luxury prices continue to outperform their mainstream counterparts. To back this point, the report said the average price of a luxury home on the index is 36 per cent higher than it was at the index's lowest point in Q2 2009 while the average price of a mainstream property has risen 14 per cent over the same period.
- Read the full research report at BTInvest (http://www.btinvest.com.sg/property)