Tuesday, December 30, 2008

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Private Property Price in 2009: Analysts forecast further decline of 15%-20%

Based on its preliminary analysis of official data, DTZ said that prices of non-landed freehold private homes in the prime districts fell by 14 per cent quarter-on-quarter (qoq) in the fourth quarter of 2008.

This follows two consecutive quarters of declines of around 4.5 per cent each.

The prime districts include District 9, 10 and 11.

Prime property prices fell 21.6% year-on-year

Overall average prime prices fell 21.6 per cent year-on-year (yoy) to $1,160 per square foot (psf), below the level of $1,200 psf registered in Q207.

Freehold non-landed homes outside the prime districts fell in Q408 but at a lower rate of 9.3 per cent qoq or 10.5 per cent yoy.

Landed housing prices also fell 5.7 per cent qoq, or 2.9 per cent yoy, islandwide in Q408.

The fall in prices follows dismal developer sales in October and November with only 112 and 192 units sold in the primary market respectively, compared to the monthly average of 444 units sold in the first nine months of the year.

DTZ said that based on caveats lodged, preliminary data from URA's REALIS showed that the number of transactions in the year is only about 35 per cent of last year's 38,100 units.

DTZ forecast property price to further decline by 15%-20% in 2009

DTZ is also forecasting a further decline of 15-20 per cent for this segment of the market in 2009.

DTZ said that the downturn in the economy will deter buyers from committing to property purchases and sales are expected to continue to remain low in 2009.

Lower rental returns will not help either.

DTZ said that average monthly rents of prime non-landed homes decreased in Q408 by 9.4 per cent qoq or 9.2 per cent yoy to $4.36 psf.

Outside the prime districts, rents held up better with an increase of 2 per cent yoy, despite a fall of 1.2 per cent qoq.

Nomura forecast property price fall of 43.8% in high end market and 32.1% in mass market

The extent of price corrections is still uncertain but Nomura has already adjusted its forecasts. In March, it forecast average prices in the luxury sector to fall by 32.3 per cent from the 2007 peak over 2008-2010 - 16.9 per cent in 2008, 10.3 per cent in 2009 and 9.3 per cent in 2010.

It now expects luxury prices to fall 43.8 per cent from the peak, and mass residential prices to fall 32.1 per cent as yields move out by an additional 25-50 basis-points.

OCBC forecast high-end propety price to fall by 15-20% and mass market by 5-10%

OCBC analysts also believe that high-end property prices could decline by 15-20 per cent in 2009 due to weak sentiment, unsold inventories and potential risks of buyers' default and fire-sales.

OCBC expects mass market property prices to remain resilient, supported by the stability in HDB prices. For the mid-market properties, it expects prices to fall further in 2009, with a projected decline of 5-10 per cent.

Extracted from BT 30 Dec 2008
May also want to read:
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Property Investment Tip: Don't put all your eggs in one basket
HDB Resale Price Index 1990-2008: Graph & Chart


Smart Buyer said...

Personally, I'm inclined to vote for Nomura's forecast. Reasons? Given the global economy and Singapore's in particular will likely worsen in 2009, one would expect property price to fall more sharply in 2009, rather than echoe similar degree of decline of 15%-20% registered for 2008. Distressed selling will likely escalate as the recession prolongs through 2009 and possibly 2010, especially that the 2007-boom was also largely attributed to the Deferred Payment Scheme.

Just my view.

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