Mass market home prices to drop sharply as massive supply enters the market

Overall vacancy rate will hit 9.8% in 2016.

Prices of homes in the Outside Central Region (OCR) booked a 1.6% quarter-on-quarter contraction in Q3, the steepest price decline in the mass-market segment for the past two years.

According to Barclays, home prices in the OCR will continue to slip in coming quarters as a massive supply of mass-market homes enters the market.

“We expect accelerating price declines in the mass market as we forecast peak completions for both public and (mass market) private housing in 2015 and 2016, increasing the vacancy rate to 9.8% and lowering prices by another 10% by mid-2016,” Barclays said.

“By then, we believe that the government could ease some property tightening measures, which should bring some reprieve,” the report noted.