2012 Property Prices Outlook: It's all downhill from here

Private residentials are too expensive now for what homebuyers are willing to pay which will lead to a 5% yearly dip, says Colliers.

The high-end market is experiencing a sales drought which should persist as purchasers look for more value deals, and even in the mass-market segment where such bargains can be found, the influx of new supply will still push prices down.

Overall, the 2012 property prices will suffer from a gradual easing with the government letting the current cooling measures drag down the price index to more reasonable levels.

"With prices exceeding historical peaks, homebuyers have become increasingly resistant towards further price growth. Coupled with the continued injection of land supply for the development of private residential projects, Executive Condominiums and more public housing from planned Build-To-Order flats, a buyers’ market with increased options may eventually emerge," said Ms Chia Siew Chuin, Director of Research & Advisory, Colliers International.

"Additionally, while the low interest rate environment could support home buying in 2012, particularly in the primary market, the slow resale market will continue to put a drag on prices. The high-end/luxury market, which is already languishing in slow sales activity, is also expected to see further price falls as prospective buyers continue to hold back on their purchases. In the mass-market segment, demand will continue to be somewhat supply driven. However, with increasing supply and options available, the potential price growth for mass-market homes will be minimised," she said.

"With a host of factors working to take the heat off record high home prices this year, further cooling measures from the Government is unlikely in the short term. Hence, barring the risk of further measures, the overall private residential property price index could fall by up to 5% for the whole of 2012," she added.