SINGAPORE - Sales in the private residential market could fall by more than 25 per cent next year, as a result of local buying fatigue from the many new launches over the past years and increasing home completions, according to a report by Savills Research Singapore.
This would mean that from the record breaking 20,000 units sold in the past 10 months of this year, transaction numbers are likely to hover between 16,000 and 18,000 next year.
Prices, however, are expected to continue their upward trend, in line with rising land costs and demand from overseas investors.
According to Savills data, the average unit price of luxury condos in Singapore posted a second quarterly rise of 2 per cent quarter on quarter (q-o-q) from $2,350 per square foot (psf) to $2,395 psf in the fourth quarter of 2012.
For the full year of 2012, luxury condo prices have risen 5 per cent from $2,286 psf in Q4 2011, but are still 4 per cent lower than the peak price of $2,495 psf in Q4 2007.
Given the rising trend, market analysts expect a price increase of about 10 to 15 per cent for mass-market non-landed properties, while luxury properties may rise by about 3-5 per cent.
"Sharply rising land costs, strong developer balance sheets and low interest rates should all conspire to make 2013 another halcyon year for the industry," said Savills Singapore research head Alan Cheong.
The report also highlighted that quantitative easing in the United States could see liquidity flowing into Asian economies such as Singapore in search of a safe haven and currency appreciation.
Coupled with rock-bottom interest rates that are likely to remain low next year, some fresh external demand can hence be anticipated.
Although an influx of new demand can be expected, the purchases made by overseas buyers are likely to be kept at modest levels, owing to the Additional Buyer's Stamp Duty (ABSD).