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Singapore private home prices suffered their biggest drop in more than 30 years in the first three months of 2009 as the country’s worst-ever recession hammered investor sentiment in the recently booming property market.
Home prices fell 13.8 percent in the first quarter of this year compared with the previous quarter, the Urban Redevelopment Authority said on Wednesday, more than twice as much as the 6.1 percent drop in October-December 2008.
The fall marked the third straight quarterly drop and was the steepest fall since the second quarter of 1975, URA said.
Shares in Singapore property firms such as CapitaLand (CATL.SI) and City Developments (CTDM.SI) shrugged off the gloomy market data in spite of analysts saying the drop in the URA’s private residential property price index had been steeper than expected.
“The trend is clearly downward,” said Colin Tan, head of research and consultancy at Chesterton Suntec, a real estate consultancy. He said the sharp drop in the index showed momentum was strong and that home prices will fall further before they find a bottom.
But Tan added that the sharp decline in the index may overstate the market’s weakness because of a dearth of deals involving homes in prime areas, several of which were sold at distressed prices.
According to the data, prices of non-landed private homes in the core central region fell 15.2 percent during the first quarter. Prices of homes in the “rest of central region” declined 17.2 percent, while prices outside the central region only dropped 7.5 percent.
Resale prices for government-built HDB apartments, which house over 80 percent of Singapore citizens, fell 0.6 percent in the first quarter from the last three months of last year, a separate index compiled by the Housing development Board showed.
Mohamed Ismail, chief executive of property agent PropNex, expects prices to decline a further 7-10 percent this year in the core central and rest of central regions, and 3-5 percent for homes in outlying areas.