SINGAPORE - THE odds seem stacked against
residential property prices in Singapore, historical data compiled by Credo
Real Estate shows.
Notably, negative residential price
corrections were reflected in the years 2008, 2000 and 1983 following several
quarters of price moderation to levels close to zero - a pattern which became
apparent in the final quarter of 2011.
Slowing to a meagre 0.2 per cent from 1.3 per
cent in the previous quarter, the residential property price index for the
fourth quarter of 2011 seemed supportive of the view that current values are
nearing their apex.
More worryingly, the fall in prices tended to
coincide with periods of negative GDP (gross domestic product) growth or
deteriorating economic conditions, which in most cases evolved into recessions.
Said Credo Real Estate's executive director
and head of research and consultancy, Ong Teck Hui: 'If a recession occurs this
year, it will certainly lead to a correction in the residential market. Even if
a recession does not occur this year but economic conditions deteriorate
ultimately leading to a recession, the market is also likely to correct.'
The debate over when the correction will take
place has been going on for a while, with many analysts arguing that property
prices would weaken this year as a result of economic uncertainty, mounting
supply and cooling measures by the government. However, the situation could
look a lot brighter if Singapore manages to escape with a mild slowdown.
'If economic conditions turn out to be better
than expected, we are likely to see a fairly stable market, albeit with uneven
performance amongst different market segments and with price adjustments within
a narrow range,' said Mr Ong.
In particular, the suburban primary mass
market could stay 'relatively healthy' due to firm underlying demand should a
recession be averted, though the secondary market, which is experiencing weaker
volume, could face a wave of price moderations.
Slower activity in the prime residential
segment is also expected as foreign buyers take time to come to terms with the
additional buyer's stamp duty (ABSD).
Michelle Tan
The Business Times
Business & Investment Opportunities
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