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Persistent weakness in private home market extends price falls

SINGAPORE — Persistent weakness in both the new and resale segments of the private housing market has led to a third consecutive quarter of price declines, and analysts said the downtrend is likely to continue after the Government said property curbs will remain.

SINGAPORE — Persistent weakness in both the new and resale segments of the private housing market has led to a third consecutive quarter of price declines, and analysts said the downtrend is likely to continue after the Government said property curbs will remain.

Prices of private residential properties fell by 1 per cent in the April-to-June period from the previous three months, following the 1.3 per cent decline in the previous quarter and slightly less than the 1.1 per cent drop estimated earlier this month, the Urban Redevelopment Authority (URA) said yesterday.

Ms Chia Siew Chuin, director of research and advisory at property consultancy Colliers International, said: “Price falls were recorded across all segments of the private residential property market, pointing to the widespread effectiveness of the multiple dosages of cooling measures, particularly the strict financing curbs of the Total Debt Servicing Ratio (TDSR).”

Non-landed private homes in the Core Central Region (CCR), the city centre, registered the steepest price decline among regions of 1.5 per cent in the second quarter, accelerating from the 1.1 per cent decrease in the previous three months. Those located in the Outside Central Region (OCR), or suburbs, registered a fall of 0.9 per cent, significantly more than the 0.1 per cent dip previously.

However, the price decline in the Rest of Central Region (RCR), or city fringes, slowed sharply to 0.4 per cent from 3.3 per cent in the previous quarter, supported by healthy buying interest for new launches such as Commonwealth Towers and Kallang Riverside.

In the landed segment, the 1.7 per cent decrease registered in the second quarter was significantly more than the 0.7 per cent slide in the previous three months.

“The combination of the Additional Buyer’s Stamp Duty (ABSD) and the TDSR framework has severely impacted the affordability for the buyers. As such, prices of landed homes not only declined at a faster pace in the second quarter, they also underperformed with non-landed homes,” said Ms Christine Li, head of research and consultancy at property agency OrangeTee.

“With the Monetary Authority of Singapore (MAS) reiterating that the Government has no intention to ease the cooling measures soon, the landed segment should continue to lag behind the non-landed segment,” she added.

The central bank said on Thursday that property prices remained at an “elevated level”, and this does not warrant the scaling back of the cooling measures. The statement came after Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said earlier this month that further price correction in the property market could be expected.

Analysts said this means the current weak sentiment is likely to be sustained for the rest of the year.

“It’s difficult for prices to regain momentum due to the continued enforcement of both the ABSD and TDSR, which will continue to work in tandem to ease demand. In addition, the sustained supply and intensified competition among developers will keep a lid on excessive price growth,” said Mr Mohamed Ismail, chief executive of PropNex Realty.

But with signs of a stabilising market, buyers who have stayed on the sidelines may return to make purchases, noted Mr Chris Koh, director of property firm Chris International.

“Prices are coming down, but the rate of decline has slowed down. We expect more declines in the next two quarters, so by the end of the year, the total decline for the year can be quite significant. That may tempt buyers to come back into the market,” he said.

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