Home price drop of over 20% unlikely, say experts
Analysts believe that private residential prices will continue to fall this year and into 2017, but the rate of decline is unlikely to exceed 20 percent, reported Singapore Business Review.
“We forecast private residential prices would dip five percent to 15 percent over 2016 to 2017 and that 2016 primary residential sales would remain muted at between 6,000 to 9,000 units,” said Eli Lee, an analyst at OCBC Investment Research.
At the same time, residential rental levels could drop by eight to 15 percent, while the vacancy rate could rise from the current 7.8 percent to around 10 percent by the end of 2017.
Nevertheless, a price correction of over 20 percent is improbable, given that demand rises as properties become more affordable, preventing prices from falling further, added Lee.
Echoing a similar sentiment is Maybank KimEng’s analyst Derrick Heng. He expects private residential prices to hit rock-bottom by the end of next year, decreasing by 13 to 16 percent from their peak.
Heng noted that developers appear to be winding down their construction activity to ease the supply glut. Data from the Urban Redevelopment Authority (URA) shows that home builders completed nearly 19,000 units in 2015, down from the projected 21,359 units for the year.
Picture Source: Private home prices could fall by up to 15 percent over 2016 and 2017.
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