Weakening buyer demand pushes primary private home sales to crash 50% in 3Q14

Home prices and sales likely to face continued headwinds.

After nine quarters of sluggish sub-2% price appreciation from 3Q11 to 3Q13, the URA residential price index finally succumbed to the latest round of measures in Jun 2013, and dipped 3.9% over 4Q13 to 3Q14.

According to a report by OCBC, while prices dipped, the decline in sales was even more pronounced. Primary private home sales (excluding landed and EC) over 10M14 fell 50.0% YoY to 6.8k units. The downtrend was broad-based, with all three segments (high-end, mid-tier and mass-market) suffering the impact of weakening buyer demand.

OCBC adds that the mood of the market has been increasingly cautious after the latest TDSR requirements implemented in Jun 2013.

OCBC believes that significant headwinds, i.e., a physical oversupply situation over FY15-16 and anticipated interest rate hikes after mid-FY15, will likely keep the market on its back foot going forward.