We saw a further sharp price correction for private properties when URA released its 1Q09 price index figures today. At 139.9, the index plummeted a massive 14.1% from last quarter’s 162.8. This is a record drop, quarter-on-quarter, for the price index.
The drop was caused mainly by great price declines in the Core Central and Rest of Central Regions; these fell by 16.2% and 17.0% respectively.
“The price index is now at a level similar to two years ago when the price index was below 140,” reveals PropNex CEO Mohamed Ismail. “Basically, in these last two years, we experienced a sharp increase in the price index due to heavy speculation, followed by a sharp decrease due to the financial crisis, the lukewarm attitude of investors and the subsequent correction we are seeing today.”
He does not expect to see such a sharp drop to repeat itself in the quarters to come, as the correction has already taken place, although he does forecast a further decline in the prices.
“We can expect to see a 3–5% drop in the Outside Central Region over the next two quarters,” Mohamed Ismail says, “in line with the price adjustments of the new launches.”
Landed property, he further notes, is showing some resilience to the overall downturn, with a drop of 9.2% for its price index, compared to non-landed property’s 15.1% decline.
“This is due to the fact that there is less speculation in this sector,” explains Mohamed Ismail. “In fact, this is a more accurate picture of the local market sentiment.”
Moving forward, he expects a total decline for the price index in excess of 22% for the year 2009, mainly attributed to drops in the Core Central and Rest of Central Regions.
On another note, Mohamed Ismail predicts a decline over the next two quarters of 5–8% for subsales in the Core Central and Rest of Central Regions, due to the continued lacklustre investment sentiment in those areas.
For enquiries, please contact:
Mohamed Ismail (CEO) 9487 1414
Adam Tan (Corporate Communications Manager) 9006 8726