Singapore’s property markethas posted another quarterly fall as tighter controls take their toll. Bankers and real estate specialists see further declines ahead.

Singapore’s property market, which in recent times has been red-hot amid strong demand, prompting calls for government curbs, has posted another quarterly fall as tighter controls kicked in. Bankers and real estate specialists see further declines ahead.

Overall, the private residential property index fell 2.3 points from 211.6 points in Q1 2014 to 209.3 points in Q2, according to the Urban Redevelopment Authority. “This represents a decline of 1.1 per cent, compared to the 1.3 per cent decline in the previous quarter. This is the third continuous quarter of price decrease,” the URA said.

The data fits with other reports. A few weeks ago, Knight Frank, the global estate agency, said that at the end of March this year, Singapore’s prices were down 8.7 per cent year-on year; Hong Kong prices fell by 5.2 per cent over the same period. Jakarta, by contrast, was up by a giddy 37.7 per cent.

In its report, the URA said prices of non-landed private residential properties in all market segments declined in the second three months of this year. In Core Central Region, prices fell 1.5 per cent, a sharper decline than the 1.1 per cent decline in the previous quarter. Outside this region, prices fell 1.1 per cent in the latest three-month period.

Carol Wu, who is head of research at DBS Vickers (Hong Kong), told this publication, which attended a briefing in Singapore by DBS about investment and economic trends, that she foresaw a fall of 5 per cent each year until the end of 2016 in the Hong Kong property market.

Separately, Stuart Crow, who is head of Asia-Pacific capital markets at Jones Lang LaSalle, the global property firm, said he could see an 8-10 per cent correction [decline] each year until the end of 2015 in Singapore. Crow said the market has shifted to such an extent that private equity groups are looking at picking up empty blocks of prime properties in Singapore.

The Monetary Authority of Singapore has recently warned that banks’ exposure to the real estate market was a cause for concern, mindful perhaps of how other countries’ financial systems unravelled when prices surged, prompting high leverage. The MAS said last year that mortgages that push debt-serving ratios for borrowers over 60 per cent would be considered imprudent.
Commenting on the URA data, Knight Frank said in a note: "The property cooling measures and the Total Debt Servicing Ratio [of the authorities] framework have continued to dampen market sentiment in 2Q 2014. In addition, there is greater awareness of unsold inventory in the market and rising vacancy of completed private homes. These trends may have prompted potential homebuyers to wait for better price offers before committing to property purchase."
"With the property cooling measures and the TDSR framework reining in buying momentum, lacklustre buying sentiment is likely to persist in the near term. With homebuyers becoming increasingly price-sensitive and discerning in their purchases, developers would need to review their pricing and marketing strategies in order to move units. The downward fall in prices could continue into the second half of 2014," Knight Frank said.
As one of the world’s most expensive cities, the cost of buying an apartment in the city-state is a potential drag on its appeal, especially for younger people looking to get into the property market. High prices in cities such as London have also become a hot political issue, prompting calls by policymakers for curbs, including taxes, to cool prices down.