Private property prices plummet in Q109

NewsApril 01, 2009

URA’s price index flash estimate for Q109 revealed a startling 13.8% drop from last quarter’s 162.8 to 140.3, the highest quarter-on-quarter drop for years.

The core central and rest of central regions were heaviest hit, with plunges of 15.2% and 17.2% respectively. The outside central region took a hit of -7.5% itself.

Despite all this, PropNex CEO Mohamed Ismail says that such a drop was not wholly unexpected, given that last quarter’s 6.1% quarter-on-quarter drop.

“This latest figure of -13.8%,” he says, “is a correction of last quarter’s relatively low drop, considering the financial crisis which hit the economy in early October last year. The effects of this are evidently being carried forward to Q109, giving us a more accurate indication of the market environment and pricing.”

Ismail goes on to explain the reason for such drastic drops in the RPI: “Besides the weaker market sentiment which led to a lower pick-up rate for core central and rest of central properties, the reduced prices of new launches in the outside central region also contributed to a lower price index.”

While he does predict a further decline moving ahead, Mohamed Ismail does not see any further drastic drop in the price index.

“Certainly we will see a continued decline,” he reasons, “as there will still be a lack of buyers for the core central and rest of central regions. Furthermore, we are also seeing a reduced number of foreigners investing or moving here. But we should expect some help from the outside central regions where demand for bargain-priced units should stay strong, as evidenced from February’s number of private property sales.”

Mohamed Ismail’s forecast for the rest of the year is a further decline of 7–10% for the core central and rest of central regions, and 3–5% for the outside central regions, with an overall drop of between 4–8%.

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