Prices might decline faster than expected.
Analysts warn that heightened stock market volatility will post the biggest threat to the residential property market in 2016.
According to JLL, extreme volatility in global markets can jeopardise the much-desired soft landing for the private home market.
“As the volatility continues, a soft landing for the private home market in 2016 appears less likely. Buyers would become more cautious and developers would be less confident in launching new projects,” said Ong Teck Hui, National Director, Research & Consultancy at JLL.
He cautioned that the ultimate toll could be a softening in transaction volume and sharper price declines.
Ong stressed that the correlation between the stock market and the residential market can be significant. In the last global financial crisis (GFC), the stock market plunged 62% between October 2007 and March 2009, and developer sales dropped 71% from 14,811 units in 2007 to 4,264 units in 2008.
“While current financial market conditions are considered less severe than the GFC, continued volatility in the stock market is still likely to have an adverse impact on the residential market,” Ong said.
Private home sales dropped 16% year-on-year to 322 units in January, marking the market's weakest start since 2009.
Slow developer sales were expected as the pre-Lunar New Year period tends to be sluggish when market conditions are unfavourable, JLL said.
The top selling private residential developments in January were The Poiz Residences, Kingsford Hillview Peak, Sims Urban Oasis, Botanique at Bartley and The Panorama. Their relatively better sales performance was mainly due to their proximity to MRT stations and amenities.
There was also no fresh executive condominium (EC) launch in January while existing projects under marketing sold 156 units, a 25.8 per cent increase over the 124 units taken up in December last year.
The better performing EC projects in January included The Amore, The Brownstone and The Vales. Sales progress in the new EC market is being impeded by buyer resistance to current price levels, JLL said.
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