TODAY ONLINE : Hot property market to cool?

Hot property market to cool?

Analysts expect drop in transactions

05:55 AM Jun 10, 2010

by Wong Siew Ying

SINGAPORE - The local property market is in for a correction in the coming months, said industry players, citing tell-tale signs like a plateau in home prices and a drop in transaction volumes.

The Singapore Institute of Surveyors and Valuers (SISV) said there were only 899 caveats lodged for condominiums in the first three weeks of last month. There were 3,060 for the whole of April.

And although new condominium projects are still doing well, property agents said homes sales in the secondary or resale market have dropped by up to 20 per cent recently.

Dennis Wee Group said buyers are becoming more cautious going by last month's sales figures.

"Instead of seeing a 30 per cent increase in transactions as in the month before, I only saw a marginal 3.5 per cent increase," said Mr Chris Koh, director at Dennis Wee Properties.

"A lot of buyers are pulling their handbrakes. What they feel today is that the seller is asking for too high a price and 'if I am not in a hurry, why not sit and wait?'" he added.

Industry data from SISV showed sales falling across various districts as of the middle of last month.

The prime districts of 9, 10 and 11 recorded a 76 per cent drop, while the downtown city area saw the sharpest decline of 88 per cent.

Analysts also expect transaction volumes to fall by 5 to 10 per cent due to the World Cup which begins tomorrow.

Meanwhile, ECG Property said it now takes longer to close a transaction. It used to be about 45 days before, but is now up to 80 days.

Industry players expect the market correction to last between three and six months, and some said home prices could trend down by 3 to 5 per cent on average during this period.

"Some of these prices are over book-keeping value where some banks may not even match some of the asking prices today," said Mr Eric Cheng, chief executive officer of ECG Property.

"That also shows that these prices could be a speculation price instead of a true reflection price. I think the market is going through a slight correction," he said.

Analysts said prices may also be capped by more land supply due to be released by the Government. Other risk factors include volatile stock markets and the European debt crisis.

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