More affordable, but buyers are scarce
Private residential property is becoming more affordable in land-scarce Singapore as developers cut their prices amid the economic slump, but buyers are scarce.
Even those who can afford to finance housing loans, usually taken out over 20 years, are hesitant as the city-state undergoes its deepest economic slump since independence in 1965, analysts say.
"Because of the uncertain economic outlook and rising unemployment figures, many people are just not confident of servicing the home loans," Grace Ng, a director at property consultant Jones Lang LaSalle told AFP.
Singapore's gross domestic product shrank 2.2 percent in 2001 after a 9.9 percent growth in the previous year, and for 2002, GDP is projected at between minus 2.0 percent and plus 2.0 percent.
The government has already told Singaporeans, who have been used to years of nearly full employment, to brace for further job losses this year.
Last year, job losses totaled 25,000, raising the 2001 unemployment rate to 4.5 percent from 3.1 percent in 2000, and the government has warned another 15,000 jobs could be lost this year.
In such a tough economic climate, Singaporeans are simply sticking to the "cash is king" adage.
"People prefer to hold cash in these times," said Ng, who is in charge of property auctions.
According to the latest data from the state land agency, the Urban Redevelopment Authority, prices of private homes dropped 2.9 percent in the quarter ended December from the previous three months, bringing a full year decline of 12.5 percent.
The year-end Market Index Brief compiled by property consultancy CB Richard Ellis showed home prices last year fell between 12 percent and 15 percent on average.
For the middle to upper range properties, prices are expected to ease a further five percent to 10 percent, CB Richard Ellis said.
Apart from cutting prices, developers of private condominiums, which come with facilities like swimming pools, tennis courts and gyms, have offered a range of other incentives to spur buying interest.
These include absorbing stamp duties which are set at 2.5 percent of the purchase price. This means that someone buying a condominium for one million Singapore dollars (543,478 US) can save at least 25,000 dollars in duties.
Other sweeteners offered include deferring the 20 percent cash downpayment.
The picture was however not entirely gloomy for the city- state's property sector, the property consultancy DTZ Debenham Tie Leung (DTZ) said.
It expected "downside risks in the private residential market to be relatively limited, compared with six to 12 months ago."
Growth in the non-resident population and a growing demand for an upmarket lifestyle by Singaporean yuppies could perk up demand.
"These could provide niche opportunities for responsive developers," said
According to DTZ, the non-resident population grew by 414,000 in the last 10 years, providing a important source of rental incomes for buyers who want to rent out their newly purchases properties -- Agence France-Presse (AFP)