Property prices in Singapore are continuing to slide, although the rate is slowing slightly.
Prices fell 0.7 per cent in the fourth quarter of 2015, estimates the Urban Redevelopment Authority, taking the year’s total decline to 3.7 per cent – slightly lower than the 4 per cent annual drop recorded in 2014.
Prices of non-landed private residential properties declined by 0.4 per cent in the Core Central Region (CCR), compared with the 1.2 per cent decline in the previous quarter. Prices in the Rest of Central Region (RCR) and Outside Central Region (OCR) remained unchanged, compared with the 1.6 per cent decline in each segment in the previous quarter.
The decrease in property values is attributed to a range of cooling measures introduced by officials, the most problematic one of which is the TDSR (Total Debt Servicing Ratio). This ratio creates a framework that prevents buyers from purchasing something that they cannot afford, restricting the amount that banks can lend to buyers accordingly – a measure that is intended to prevent the kind of subprime mortgage crisis that sunk the US housing market and many others.
TDSR was forecast at the start of 2015 to send house prices falling by up to 15 per cent.
Mr Ismail Gafoor, PropNex Realty CEO, notes that the TDSR has “an impact on the mass market segment where the capacity to take up loans is critical for middle income buyers”. As a result, more potential buyers are finding it hard to buy a property, despite falling prices overall.
Sellers, meanwhile, are finding it harder to sell property due to competition from developers, who are launching projects at attractive discounts and with incentives to stimulate sales.
“This may put a fair bit of pressure on sellers in the resale market, who may have to lower prices in order to make a sale,” adds Mr. Ismail.Google+