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    Oct 02, 2014

    Falling home prices set to continue

    PROPERTY markets have continued to slide, with Housing Board resale prices still falling more than those of private property, official flash estimates showed yesterday.

    HDB prices fell 1.6 per cent in the third quarter, faster than the previous fall of 1.4 per cent.

    While private property prices slipped 0.6 per cent in the latest quarter, this was less than the 1 per cent decline before.

    This is the fifth straight quarter of decline in the HDB market and the fourth in the private market, with HDB prices consistently falling more than those for private property.

    Compared to a year ago, HDB prices have fallen 6 per cent and private prices, 3.8 per cent.

    Experts said the differing pace was due to cooling measures hitting public property harder.

    "The HDB buyers' ability to pay is severely affected by the mortgage servicing ratio of 30 per cent," said ERA Realty key executive officer Eugene Lim, referring to the cap on how much income can be used for housing loans.

    In addition to this, HDB buyers who take a bank loan also face a Total Debt Servicing Ratio (TDSR) of 60 per cent, he added. Private property buyers are affected only by the TDSR.

    Another reason for the slower decline in the private market is that it continues to see some demand from aspirational buyers and investors, added R'ST Research director Ong Kah Seng.

    Nicholas Mak, SLP International Property Consultants' head of research, noted that the private property index includes both new sales - which have stayed stronger - and private resale, while the HDB index is just for resale flats.

    The slowdown in the private market was less severe in all segments except landed property, according to Urban Redevelopment Authority flash figures.

    In the city centre, prices for non-landed private homes fell 0.9 per cent, less than the second quarter's 1.5 per cent slide.

    The suburbs saw a gentle dip of 0.2 per cent, compared to 0.9 per cent before.

    In the city fringe, prices fell 0.1 per cent, compared to 0.4 per cent previously.

    But landed property prices continued to fall steadily. Prices were down 1.7 per cent, the same decline as in the previous quarter.

    The third quarter saw developers launch more projects, and cooling measures have made them price their launches attractively so as to move sales, said Mr Lim.

    Experts agree that the downward trend is set to continue till at least the first half of next year, though they differ on the details.

    "The softer fall may be a sign that prices have stabilised and (the market) is starting to find its footing," said Mr Lim.

    ERA's projection is that HDB prices will fall by 5 to 8 per cent for the whole year, and private prices by 5 to 6 per cent.

    Mr Ong, however, thinks private prices may start falling faster than HDB prices in the next six to nine months.

    As the cooling measures continue, aspirational demand and investor interest in private property will dry up, he said, adding: "As home loan curbs continue, aspirations have to take a reality check."