Chart of the Day: Here’s why property prices will continue to plummet in 2016

Prices are now down 8% from their 2013 peak.

The supply glut has been the bottomline of property developers’ headaches in 2015, and it was also aggravated by an agonising slump in home sales, which almost halved compared to previous years.

Additionally, downward pressure from policies have only added salt to the wound of property developers.

On this backdrop, analysts from RHB Research say another 6-8% drop in property prices is all but in the books for 2016.

“Developers with unsold inventory facing looming deadlines of qualifying certificate (QC) charges/ additional buyer's stamp duty (ABSD) fees are likely to trim prices to clear stock,” RHB Research said.

Meanwhile, developers are left searching for a ray of hope next year, and it just might appear in the form of a policy easing.

“Against a backdrop of declining price/volumes and lack of speculative demand in the system, we expect the government to review and fine-tune the array of measures that have been introduced since 2009,” RHB Research said.

“Measures that could be reviewed include tweaking downwards stamp duties for buyers and sellers and providing reprieve to developers from QC charges/ABSD penalties on unsold stock. These adjustments, combined with more attractive home prices, could drive transaction volumes and provide a catalyst for the sector,” they added.

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