HOPES that a slowdown in Singapore's property market is temporary are fading, as an uncertain economic outlook and a looming housing glut threaten to plunge the sector into a prolonged downturn.

Home builders such as CapitaLand, Keppel Land and GuocoLand have delayed launching new projects in the moribund market, taking a hit to first-quarter earnings as they hoped for a rebound later this year.

With home prices expected to fall 30 to 40 per cent over the next three years, Singapore's developers could be badly hit and analysts may slash their earnings estimates further.

'This is the start of a multi- year price correction. Private residential property prices could easily fall by up to 30 per cent by 2010,' said Barclays Capital economist Leong Wai Ho.

In a report this month, Credit Suisse saw rents and property prices falling by as much as 40 per cent.

Warning signs have been flashing as first quarter 2008 sales volumes slumped to the lowest in five years and price growth slowed for two straight quarters, amid concerns about a global economic slowdown and the United States sub-prime mortgage crisis scaring off potential home buyers.

Mr Leong said an impending oversupply will worsen the problem, with 66,000 new homes expected to be completed over the next four years, against a forecast demand of 50,000.

The three-month Singapore Interbank Offered Rate - a benchmark for mortgage loans - has fallen below 1.3 per cent, but that may not be enough to revive buyers' flagging confidence, economists say.

Analysts expect speculators will dispose of about 700 units on the cheap this year, and another 2,000 next year, as the properties near completion and instalments are due.

But some developers are still counting on home prices to rise for at least another year.

'This is a temporary hiccup. We just had a boom starting in 2006 and it's usually a seven- year cycle,' said property tycoon Kwek Leng Beng, who heads Singapore's No. 2 developer City Developments.