Non-landed private home resale prices fall 2% in February. The number of resale non-landed private homes transacted in February was also the lowest in more than five years, according to latest numbers from the Singapore Real Estate Exchange.
- Two hundred and forty-two resale non-landed private homes changed hands in February, down by 22.2% YoY. This was the lowest monthly sales number since December 2008. The drop was 18.5% compared to January 2014.
- Resale prices fell by 2 per cent from January. The prices of homes in the city dropped 3.9 per cent, followed by suburban home prices, which decreased 1.8 per cent. However, city fringe home resale prices climbed by 0.4 per cent.
- Overall rental prices fell by 1.0 per cent. The largest decline of 1.9 per cent was for property in the city fringe area, followed by a 1.3 per cent decline in suburban areas. Rentals in the Core Central Region fell by 0.6 per cent.
In my opinion, the downtrend is likely to persist over the next 3 years, especially in 2015 when many new units are expected to hit the market. In the long run, I believe housing prices should track inflation, income and rental yields, neither of which have appreciated substantially over the past 2 years.
The argument that property prices will never go down in because Singapore is land-scarce simply does not hold water. Housing prices have to be supported by wages or rental income. If the locals cannot afford to pay sky-high prices, if the units cannot be rented out to cover the mortgage, if the returns on investment are wiped out by rising interest rates, demand will disappear and prices will have to go down until it becomes attractive again.
Get Rich Happily 