Home prices have peaked 'but won't crash'
http://www.straitstimes.com/Money/St...ry_277030.html
Sep 10, 2008 Wednesday
Home prices have peaked 'but won't crash'
By Jessica Cheam
HIGH-END home prices have dropped by about 15 per cent to 20 per cent and will 'stabilise at this level', Wing Tai Holdings deputy chairman Edmund Cheng said yesterday.
The United States sub-prime crisis has affected Singapore's property market, he said.
Transactions here in the first half of the year have dropped by about 77 per cent from the same period last year, he added.
'In recent launches and resale of high-end properties, the market experienced about a 15 per cent to 20 per cent drop, but I believe we're going to stabilise here.'
Many developers have strong balance sheets and acquired properties before the property boom last year, so they are sitting on profits and 'will not be forced to sell below what they believe is the right price', he said.
The era of condominiums selling out within days of their launch is over, he said. Property sales in Singapore will see a more 'normal pace', with decent-sized projects taking six months to a year to sell out.
Home prices have 'peaked for now', but they will not crash as long as developers and home sellers hold on to their properties, he added.
Asked about concerns of further home price falls and a potential supply glut in 2010, Mr Cheng replied that these would depend on whether the US financial crisis would deepen.
'If it's really bad, obviously Singapore will be affected. In the meantime, we won't see that (happening).'
Singapore's burgeoning population, especially foreigners who come to the country to live and work, will be able to absorb this supply, he said.
He was speaking on the second day of the annual Forbes Global CEO Conference, held at the Shangri-La hotel.
In a session titled 'Rolling the dice on real estate', a panel of speakers, including Mr Ronnie Chan, the chairman of Chinese developer Hang Lung Properties, spoke on pressing real estate issues.
Mr Chan said China's real estate market had been affected more by domestic economic conditions than the US crisis.
'Real estate is a long-term asset. Some short-term impact will be inevitable, but in the longer-term view, it's not as serious,' he said.
Mr Stanley Gale, the chairman and managing partner of Gale International, a New York-based property developer, said the US sub-prime crisis was a banking crisis, 'not a real estate one'.
It is more difficult for developers to get financing in the US now. Despite the nervousness, however, the market has strong fundamentals, he said.
The office market, for example, especially in the Central Business District, has held on very well, he said. 'The US is open to new ideas and quick to change.'
With the efforts by the US authorities to take over ailing mortgage finance giants Fannie Mae and Freddie Mac, and the US presidential elections in November, 'we'll see a different economy in the US going into 2009'.
