The island-wide price index in property recorded a plunge of 14.1 percent in Q1, slightly higher than 13.8 percent flash estimate.
To date, this is considered the worst decline for a quarter. It is also worse than the quarter-on-quarter decline of 13.1 percent in Q3 of 1998 when the financial crisis in Asia affected the residential market.
Prices of private homes have now dived for three straight quarters, having a total drop of 21.2 percent since the peak in Q2 of 2008.
According to URA, the index of private home property is now close to the level it had in Q1 of 2007. Hence, home-owners who bought their flats after Q1 of 2007 may be at risk of having property valuation fall below the price of their purchase. For those owners who had their properties on deferred payment scheme and still have to make a loan would have the price ratio of loan-to-purchase limited, which they can get from financing companies.
However, anecdotal evidence has shown that these buyers were capable of paying up the purchase amount that was not supported by the valuation. This was necessary to control some distressed sales.
Furthermore, although prices of private homes are still expected to be depressed, the decline rate is expected to become moderate from the peak of Q1 of 2009, as home developers have substantially marked the down prices. Mass-market of homes could expect more gradually averaging price corrections in the region by up to 8 to 12 percent for the following three quarters, as developers of units that were not sold and secondary market sellers could adjust prices close to current levels.
The high-end and mid-tier segments could see larger declines in average price ranging from 10 to 15 percent over the same period.