AMID difficult economic conditions, home sales are expected to remain weak next year, said real estate firm DTZ in a research report yesterday.
Job insecurity and further weakness in the market will deter buyers from committing to property purchases, it added.
This will weigh on consumer spending and create a 'contagion effect on the property market'.
Already, residential sales in the past two months have been 'dismal', said DTZ, adding that only 112 units were sold in October. This was the lowest figure since the Urban Redevelopment Authority (URA) started releasing monthly sales data in June last year.
Last month was slightly better with 192 units sold, but it was still a dramatic drop from the monthly average of 444 units sold in the first nine months of the year.
URA data showed that while 38,100 units were sold last year, only a third or so of this figure changed hands this year.
DTZ called these results a 'complete reversal of the trend in the private residential market', and said the fall in home prices gathered pace in the fourth quarter 'on the back of worsening sentiment'.
Non-landed properties were hit hardest, as prices of non-landed freehold private homes in the prime districts fell by 14 per cent in the fourth quarter from the quarter before. This was after the sector had already fallen by 4.5 per cent in each of the previous two quarters.
Overall, average prices fell 21.6 per cent from the year before, to $1,160 per sqft - a level not seen since the second quarter of last year.
Even landed housing prices, which had held firm up to the third quarter, 'succumbed to the weak conditions' and fell in the fourth quarter, said DTZ.
However, these did not fall as drastically as other sectors, with freehold prices slipping between 3.8 and 5.7per cent from the third quarter.
Rents have also been dropping.
DTZ said rents of non-landed private residential properties, which first corrected in the third quarter, 'continued to head southwards as more expatriates are being repatriated'.
It added that tenants, possessing lower housing budgets, are increasingly moving from prime locations to the suburbs, or downgrading to smaller units.
Average monthly rents of prime non-landed homes fell 9.4per cent from the previous quarter to $4.36 per sqft.
There is, however, a silver lining amid the gloom, observed DTZ.
Ms Margaret Thean, the firm's executive director, said: 'Housing loan rates are low despite more cautious lending from banks, and there are investors waiting to enter the market when prices have fallen to attractive levels.'
This article was first published in The Straits Times on December 30, 2008.
