Including the 1.1 per cent quarter-on-quarter drop in the second quarter based on Urban Redevelopment Authority' s (URA) latest flash estimate, the official private home price index has shed 3.2 per cent in three straight quarters of declines after peaking in Q3 last year.

In the first half, the index has eased 2.3 per cent (comparing the latest Q2 number with that for Q4 2013) and consultants expect a 4-8 per cent full-year decline. Property consultants are forecasting a moderate price erosion - barring a recession or external shocks.

CBRE executive director Joseph Tan attributes the Q2 price drop to competitive pricing by developers for ongoing projects in the primary market, as well as softer prices in the secondary market as property owners are now more prepared to lower prices.

ERA' s key executive officer Eugene Lim reckons the softening rental market - which has been under pressure on the back of rising private housing completions and a slowdown in new demand due to reduced expat inflow - is also contributing to sliding home prices.

The 1.1 per cent drop in Q2 is smaller than Q1' s 1.3 per cent fall. That was probably due to prices of non-landed homes in the city fringe, or Rest of Central Region (RCR), easing at a slower clip of 0.6 per cent in the April-June quarter compared with the 3.3 per cent slide in the first three months.

Market watchers believe the RCR subindex in Q2 was probably supported by the launch of Kallang Riverside and Commonwealth Towers, with respective median prices of $2,111 per square foot and $1,626 psf achieved in their first month of launch.

In all other categories - non-landed private homes in Core Central Region (CCR) and Outside Central Region (OCR), as well as landed properties - the latest flash estimate Q2 price declines were bigger than in Q1 (see table).

The 1.1 per cent contraction in suburban locations or OCR in Q2 (compared with a 0.1 per cent dip in Q1) is thought to be due to lower-priced units transacted at a number of projects - most notably The Panorama in Ang Mo Kio but also to a lesser extent, Vue 8 Residence in Pasir Ris, Riverbank @ Fernvale, The Tembusu in Kovan and The Skywoods in the Dairy Farm area.

The pace of price decline also gathered momentum for non-landed homes in CCR - which includes the traditional prime districts 9, 10 and 11, Downtown Core Planning Area and Sentosa. The subindex shrank 1.5 per cent in Q2 after falling 1.1 per cent in Q1.

This segment has posted the sharpest drop of 5 per cent after five consecutive quarters of decline since its recent peak (in Q1 2013), amid a slowdown in purchases by foreign buyers and investors due to the additional buyer' s stamp duty (ABSD).

Landed homes - long regarded as a bastion of strength in the Singapore property landscape due to their more limited supply - have also been seeing their prices crumble. URA' s subindex for this category eased 1.5 per cent in Q2, double the 0.7 per cent fall in Q1.

SLP International executive director Nicholas Mak attributes the continuing decline to thin transaction volume.

PropNex Realty CEO Mohamed Ismail noted that while buyers will continue to favour reasonably priced homes with desirable product features and location, the private residential market looks to be heading towards " a more muted growth trajectory with weak demand" . Total Debt Servicing Ratio (TDSR)-

induced credit tightening will continue to rein in exuberant buying, while softening resale HDB prices are eroding the capacity for upgrading to private housing. As well, there is a plethora of choices for potential buyers.

CBRE estimates developers have sold 4,300-4,400 private homes in the first half. With a limited number of new mass-market projects expected to come onstream in H2, the full-year figure could be 8,000-9,000 units.

Knight Frank' s projection is 9,000-12,000 units. Last year' s figure was 14,948 units.

Analysing some of the options for developers, JLL national director Ong Teck Hui said: " Developers that have not paid too high for land have a bigger margin and can price new launches more competitively to achieve better take-up. They are in a fortunate position.

" As for existing projects with unsold units, the dilemma facing developers is that there is no guarantee that even if they cut prices by 10-15 per cent, they will finish selling the rest of the project - as demand has shrunk significantly due to TDSR."

Savills Singapore research head Alan Cheong said that at this juncture, a critical factor for developers' success is " how good they are at reading buyers' wishes rather than their needs" .

" For example, buyers may only want to invest in real estate rather than upgrade so to speak. If this is the case, it is pointless to build larger units so that a family can move in comfortably. Smaller units may be what they want, and with the TDSR and cooling measures still in place, that may be where the market is for the masses," he added.

By thus minting a substantial chunk of units in the affordable lump-sum price range for buyers, developers can maintain, if not inch up, psf prices.

 

Retail brokers spoke of only sporadic interest from their clients. " We are spending our time improving our Candy Crush score," one of them said, referring to a popular computer game that can be downloaded on smartphones.

The weakness and generally quiet session was attributed partly to the closure of the Hong Kong market for a public holiday since traders here usually rely on rises and falls in the Hang Seng Index for direction, and partly to an unconvincing Wall Street where recent economic data has questioned the robustness of the recovery.

There was also a likelihood of caution having crept into trading ahead of the speech later in the day by United States Federal Reserve chief Janet Yellen on financial stability at the inaugural Michel Camdessus Central Banking Lecture at the International Monetary Fund in Washington. Top of the agenda would be whether Ms Yellen says anything about raising interest rates.