While property developers are now in stronger financial positions, we believe capital values are unlikely to hold in a crisis scenario. We have turned more bearish on the macro environment and expect prices to fall in 2012. We lower our residential prices assumption by 12-18%, from S$2,900psf to S$2,550psf for the luxury-end and S$1,000psf to S$850psf for the mass market.

This implies a 18%-25% reduction from current transacted levels and closer to values seen in 2009. With the expected slowdown in the global economy next year, we believe volumes for more affordable mass market units will hold. Sentiment for the high-end is unlikely to see respite, a segment we have been wrong about.