LUXURY-HOME prices could fall by up to 20 per cent this year, assuming sub-prime woes do not end this year.
The mass market, however, may hold its own or ease 5 to 10 per cent at most - the worst-case scenario according to most property players polled by The Business Times.
In a best-case scenario with sub-prime woes clearing by mid-year, high-end prices could rise up to 10 per cent and mass-market homes as much as 15 to 20 per cent, the majority of respondents said.
The most optimistic is Jones Lang LaSalle Research, which forecasts an 18 to 22 per cent increase in luxury/prime prices and a 20 to 25 per cent gain in mass-market prices in a best-case scenario.
Sales activity is generally expected to be quiet in the first half, before picking up in the second half. Most developers and property consultants are hoping the sub-prime-related gloom will vanish in the second half.
But Wing Tai deputy chairman Edmund Cheng feels it may not be realistic to expect sub-prime problems to fade away by mid-year.
On a more positive note, he believes mid/upper-mid projects near Orchard Road will be more resilient "as they should benefit from demand for replacement properties by those who have sold prime district homes through en bloc sales, as well as demand from expatriates who find prime district housing too expensive".
Agreeing, Credo Real Estate managing director Karamjit Singh thinks mid-tier private home prices will appreciate 10 to 15 per cent this year in a best-case scenario, outpacing his estimate of gains of 10 per cent for the suburban/mass market and 5 to 10 per cent for upmarket homes.
Frasers Centrepoint CEO Lim Ee Seng said: "Even in a worst-case scenario, I don't really see mass-market home prices coming downmuch because construction costs are still going up and that raises the breakeven cost of such projects."
Knight Frank executive director Peter Ow says the mass-market will benefit from strong demand from HDB upgraders, given the shortage of HDB homes.
In the high-end category, many property analysts with stockbroking firms see an oversupply of potential launches as sites sold through en bloc sales are redeveloped.
Most market watchers say the upside for high-end residential prices will be limited even if the sub-prime problem clears around mid-2008.
