Singapore property market boom ends : URA expects Q3 2008 private home prices to fall 1.8%

This article belongs to the Singapore property market story arc.

channelnewsasia.com :

Private home prices in Singapore fell by 1.8% in the third quarter [Q3 2008], according to flash estimates released on Thursday [2 Oct 2008] by the Urban Redevelopment Authority [URA]. This is the first time the index of private residential properties has dipped in 4 years. The cost of high-end properties in prime districts continues to taper, with prices falling by 2% quarter-on-quarter, but those in the mass market segment grew marginally by 0.1%. Industry watchers expect a gradual sell-down of properties if prices trend down further and the economy takes a turn for the worse. In contrast, prices of resale public housing flats rose 4.2% in the third quarter.

- This little tidbit hit the front page of the Straits Times recently. It is now all but official. The boom in the Singapore real estate market has ended, and we are heading downward. It wasn't too long ago that bystanders stood gawking as the highest of the high end of the housing market started hitting $2000, $3800 and then over $5000 per square foot.

Accompanying this dizzying rise in property prices, rentals rose, with retail shops in the prime Orchard Road shopping area reportedly tripling from $10 per square foot per month to over $30. Likewise, in the commercial area, prime office space tripled as well, with rental rates rising from $5 psf per month to over $15. Even the lowliest 5-room HDB public-housing apartment flats started renting out for well over $1000 per month.

It is interesting to see how the credit crisis has changed all that. Early rumblings started months back when property agents started talking about business slowing down. In retrospect, the early warning indicators were all there : the Kuwaitis pulling out of a high-profile deal, the government raising development charges and promising more supply (governments tend to have slower reaction times), the talk of moving some companies and departments out of the central business district into cheaper suburban areas. The crucial confirmation of a trend reversal came when I read on a forum just a few weeks back about property agents approaching people to buy properties from them instead of the usual question, "are you interested in selling your house?" That was a huge flashing signal. And now we have this.

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