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Friday October 4, 2013 MYT 12:00:00 AM
Sunday October 13, 2013 MYT 1:34:16 PM
Home prices could fall by as much as 20% by the end of 2015 in the wake of oversupply, tougher loan rules and rising interest rates, say analysts.
One warning comes from a Barclays report which noted that risks from a number of directions are putting pressure on residential values and hitting demand at new launches.
“We expect developer sales to fall by 30% in 2013, as the latest sets of measures bite,” it said.
In a separate report, CIMB said that a large supply of new homes set to hit the market could cause prices to correct by 10% to 15% by 2015.
Affordability has become more of an issue since new loan curbs were introduced in June. These cap a borrower’s total monthly debt payments at no more than 60% of his gross monthly income.
Developers sold 11,174 new units in the eight months to Aug 31 – 27% down on the same period a year ago, said Barclays in its report last week.
Transactions could fall to a monthly average of 1,000 to 1,100 homes by the end of this year, bringing the total number of sales expected this year to 15,500 – 30% below the 22,179 recorded a year ago.
The impending supply of new homes could also place downward pressure on home prices, added CIMB analyst Donald Chua.
Barclays estimates that this “total housing supply could average 40,000 units per annum, and peak at 47,000 in 2015... significantly above the historical average annual supply of 12,300”.
Its analyst, Tricia Song, said a supply glut would cause vacancy rates of private homes to rise from 5.6% this year to 9.9% in 2016.
“Historically, when vacancy hits 8%, rents and prices tend to start declining,” said Song. — The Straits Times / Asia News Network
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Home prices could dip 20% by end-2015
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