Private home prices dip 1.3% to a six-year low

Gloomy predictions are on the market's heels.

The Singapore real estate market experienced its largest quarterly fall since 2Q09 in 3Q15, marking a 1.3% slide in the private residential property price index, according to OrangeTee. Non-landed properties prices sank-- prices in core central region (CCR) plummeted by 1.2%, but outside the central region (OCR) and rest of central region (RCR) took the biggest blows as each suffered a 1.6% decline.

Unsold developer inventories shrunk due to demand for new launches and dwindling Government Land Sales (GLS). Private residential sales inched forward this quarter with 4,159 sales compared to 2Q15’s 4,104. Occupancy rates even tiptoed into 92.2% from 2Q15’s 92.1%.

These small victories are just the calm before the storm, though. “Investors’ holding power will be tested,” OrangeTee stated.

The market will need to brace itself as occupancy rates outpace supply. Severe foreign labour conditions are hindering potential rise in demand, which is made all the more troubling by the fact that 58,348 residential units are to be completed in the next few years. Rents are also expected to remain weak even as holding costs and interest rates rise.