Home prices in Singapore are expected to drop between eight and 10 percent over the next year, as government measures work their way into the property market despite a worsening global economy, said brokerage firm UOB Kay Hian.
It pinpointed the weakening macroeconomic environment and the huge upcoming supply of housing as the key factor. It added that home buying activity will fall rapidly once the unemployment rate increases.
UOB Kay Hian pointed out that property developers’ cautious stance in recent auctions for residential sites indicate moderating price expectations.
“Biddings for recent residential sites witnessed a lukewarm market response, with top bids coming in 10 to 15 percent below market expectation,” it said in a report.
“While developers actively sought to replenish their falling land banks, the cautious bidding stance is suggestive of moderating selling price expectations amid weakening macroeconomic environment.”
The report came after the Real Estate Developers’ Association (REDAS) urged the government to review its land sales programme to make sure that new housing supply is introduced only when the market can accommodate it.
REDAS also called on the government to review property tightening measures already implemented to ensure that genuine demand is not artificially suppressed.
The government will launch 17 private residential sites for sale in the second half of 2011. Including sites recently sold, approximately 53,000 private units are expected to hit the market in the next few years.
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