Business

Improving market confidence in property market

The property market appears to be finally clawing its way out of what has been a lengthy rut.

Declines in private home prices and rents slowed in the fourth quarter while sales of new units picked up.

The office and retail space segments, although still challenging, also offered some bright spots.

The numbers do not warrant popping the champagne just yet, but they do point to improving market confidence.

Mr Nicholas Mak, executive director at SLP International, told The Straits Times: "Things are less gloomy now compared to a few years ago when there was a huge supply overhang. The fear was that prices and rents may collapse; that didn't happen."

The optimism stems from data released by the Urban Redevelopment Authority on Friday.

They showed that overall private home prices fell the slowest in 2016 amid a three-year losing streak - down 3.1 per cent compared with drops of 3.7 per cent in 2015 and 4 per cent in 2014.

There was also improvement at the end of last year, with overall prices dipping 0.5 per cent from the third to fourth quarter, much better than the 1.5 per cent drop from the second to the third quarter.

Price declines have become the norm since the third quarter of 2013, after a raft of cooling measures tamed property demand and sent values of private homes down by about 11 per cent.

The softer prices wooed buyers back last year, boosting new home sales to 7,972 units (excluding executive condos), up from the 7,440 shifted in 2015.

"With sales increasing coupled with a declining number of unsold private residential units, and the moderation in price decline, we anticipate home prices are bottoming out in 2017," said Dr Lee Nai Jia, head of South-east Asia research at Edmund Tie and Company.

Analysts expect prices to continue to fall this year - by about 2 to 3 per cent - which is music to buyers' ears.

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