Is Singapore's luxury property market headed for a slump?

Savills says buying interest in the luxury market may fall in the next six months.

And prices for high-end homes are expected to drop between 5% and 10% in 2012.

Here’s more from Savills:

Prices
According to Savills data, prices of high-end and super-luxury homes are expected to hold steady in Q4 after a price fall in the previous quarter. The average unit price for non-landed high-end private homes rose marginally by 1% quarter-on-quarter from S$2,243 per sq ft in Q3/2011 to S$2,268 per sq ft in Q4/2011E.

The average super-luxury residential price slipped marginally by 0.2% quarter-on-quarter from S$3,667 per sq ft in Q3/2011 to S$3,661 per sq ft in Q4/2011E.

At the end of Q4/2011, high-end and super-luxury home prices are expected to rise 0.4% and 8% respectively from the beginning of the year. As a result, price gaps between current levels and previous peaks in Q4/2007 narrowed, with high-end and super-luxury home prices being just 6% and 0.6% from their peak levels respectively.

Outlook
The ongoing macro-economic turmoil is likely to dampen market sentiment further in the coming months. Coupled with the increased home supply, the new property curbs are likely to offset any surge in demand brought on by population growth or lower interest rates.

Buying interest in the luxury market may fall in the next six months, while well-located mass-market home launches should continue to draw healthy interest from genuine home purchasers.

More developers are also expected to fast-track their new project launches ahead of any further economic backlash. This is especially so for the mass-market home segment where competition will intensify next year, as more than 20 new sites were sold under the government land sales programme this year.

The softening market could see new home sales (excluding ECs) hovering between 15,000 and 15,500 units this year, coming in just below last year’s record of 16,292 units. A possible surge in mass-market home launches in the coming months could mitigate the fall in demand from the imposition of the ABSD. New sales could therefore reach between 10,000 and 12,000 units in 2012, with the core demand likely to come from Housing Development Board upgraders.

Prices of new mass-market and mid-tier homes could hold steady next year while prices for high-end homes may fall between 5% and 10% in 2012.

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