By Wong Siew Ying | POSTED: 23 Nov 2013 00:15 | CNA

SINGAPORE

Market watchers have said that price cutting among developers on new project launches will likely lead to a drop in private residential prices in the fourth quarter.

If so, this would be the first quarterly decline since the second quarter of 2009.

They added that the price war is also setting in in the resale market.

Duo Residences in Bugis is one of several projects that are expected to push private home prices down in the fourth quarter.

Some analysts said its average selling price of S$2,000 per square foot (psf) is about S$200 to S$400 lower than what they had expected.

Competitive prices at Sky Vue in Bishan, Thomson Three, Alex Residences in Redhill and The Inflora at Flora Drive are also likely to weigh on price growth.

As a result, market watchers said home prices in the fourth quarter could fall by between 1 per cent and 3 per cent.

Market watchers added that the decline will be driven largely by the city fringe homes and those in the core central region.

Chesterton Singapore said homes in the suburban areas are still expected to enjoy a marginal price growth of 0.5 per cent in the fourth quarter.

But beyond that, some analysts are projecting an intense price war in the mass market segment.

Donald Han, managing director of Chesterton Singapore, said: “(It will be) maybe one or two more quarters before we see a turning point of a drop in prices for the outside central region. Year-to-date prices have risen by close to 6.1 per cent. But for the first quarter next year, all eyes will be on that because we see more projects are going to be launched and there has been a lot of price cutting by developers.”

In the resale market, which accounts for about a third of overall transactions, analysts said there is no panic selling, but those who do need to sell are asking for less.

Ku Swee Yong, CEO of Century 21 Singapore, said: “The secondary market would also quickly respond to the developers’ lowered prices, so an investor who purchased four to five years ago might also be willing to forego large profit and price themselves a little bit below developers’ pricing. Recently, we saw asking prices in Ascentia Sky have reduced in order to compete with the launch prices of Alex Residences.”

Century 21 Singapore said recent transacted prices at Ascentia Sky came in at S$1,400 psf, about S$200 below valuation.

Meanwhile, nearby Alex Residences is going at an average selling price of S$1,650 psf.

The prices of private residential properties have risen by 2 per cent in the first three quarters of the year and analysts said a weaker fourth quarter is likely put a drag on overall price growth in 2013. They are expecting prices to either rise by 0.5 per cent or decline by 1 per cent this year.

Market watchers expect price competition to continue across all private housing segments in 2014.

– CNA/ms

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