Private home prices predicted to fall 10-20% by 2015

Here are 2 reasons behind it.

According to Barclays, they believe new private home sales volumes will come off 30% in 2013 on the recent government measures, and private home prices could fall 10-20% by 2015E, due to these reasons.

1) A mortgage rate hike coinciding with peak housing completions, resulting in higher vacancies and required rental yield expansion; and

2) A weak secondary market due to the seven prior rounds of tightening measures.

Here's more from Barclays:

Our economist Joey Chew wrote on 12 Sep “Openness and household debt – the Achilles’ heel” that a macroeconomic shock could also trigger a market correction.

Historically, we estimate residential developers have traded at 25-40% discounts to RNAV when 6-month forward home prices fall 10-20%.

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