The figures from the Urban Redevelopment Authority show that property prices have now been declining for the third quarter in a row.
According to analysts the worsening global economy has destroyed demand. 'The slowing to almost a trickle of the primary sale market in the last quarter of 2008 and January 2009 amid deteriorating global macro-economic conditions, credit and job markets was probably the trigger for this drastic price fall,' said Tay Huey Ying, director for research and advisory at Colliers International..
Developers reducing prices has also had a negative effect according to Mohamed Ismail, chief executive of PropNex. '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,' he explained.
Prices of non-landed private homes in the core central and rest of central regions were hardest hit declining by 15.2% and 17.2% respectively. Meanwhile, those in the outside central region declined the least at 7.5%, the figures show.
Analysts expect property prices to continue falling in 2009, although this decline will likely taper off. 'Developers have already made a quantum leap in reducing prices in the first quarter of 2009 and although further declines in launch prices can be expected, the incremental drop is likely to be marginal and more gradual,' said Ying.
'Certainly we will see a continued decline 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,' Ismail said.
Meanwhile, he expects mass market projects to continue doing well. 'We should expect some help from the outside central regions where demand for bargain priced units should stay strong,' he added.
