So says a shocking Citi report on Singapore property.
Citi expects our GDP to contract by 2.8% this year, “making it the most severe recession in Singapore history.”
As for property prices, the report also says that a crash is imminent (see related article: Property Must Crash).
Condominiums in the mid-tier segment is expected to have a price decline of a further “35% from current levels, or … 45% from their peaks”, with luxury condos faring worse.
But mass market prices are “likely to hover around the 1998 lows rather than the (lower) 2003 levels.” [Editor’s note: mass market prices are generally lower in 2003 than in 1998 even though URA price index for the overall market shows otherwise.]
On condos sold on Deferred Payment Scheme (DPS), which was suddenly withdrawn in late 2007, Citi has this to say:
“We are increasingly concerned about projects launched close to the peak of the market and sold on deferred payments. … With valuers and banks taking a more cautious stance on the market, buyers who have purchased these units as investments are likely to face (1) lower loan-to-valuation (LTV) ratio of 70% or less for investors; and (2) significantly lower valuation from purchase on the back of falling prices.”
The report goes on to list selected condo projects that will obtain TOP in 2009.
Of the 25 projects listed, 1 has a price change of 0% (Casa Merah) and 5 have a price change of -5% to -11% (Tierra Vue, Ardmore II, RiverGate, Grand Duchess at St Patrick’s, and One-North Residences).
This means that 6 out of the 25 condo developments are now selling at launch price or lower!
Fortunately for some investors and owners, the following projects are still sitting on double-digit profits: One Jervois, Carabelle, ClementiWoods Condominium, The Inspira, Imperial Heights, The Centris, Newton One, The Esta, The Beacon, and Tribeca.
But for how long?
Will we hear of more stories like the couple who got stuck with property?