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A recently released report by global Realtors, Cushman & Wakefield ^[2] is predicting a fall in prices of apartments and condos in Singapore city’s CCR (Core Central Region). The report further states that it is unlikely to see another peak period within the next four years.

Cushman & Wakefield’s forecasted fall will also depend on the growing economy of Singapore. Expected drops have been estimated at 8% and 17% respectively. The market isn’t expected to recuperate until 2012.

However, despite this somewhat gloomy forecast, now is actually a good time to buy in the city if we are to believe Lee Chong Yong ^[3] who was responsible to develop the C & W model. According to him “there is still a lot of housing supply within the city.

Some of these units haven’t been launched yet. As time goes on, the unsold or yet to be sold stock will keep creeping up, until 2011.”

The rate in which this pressure applies to curb housing prices largely depends on the local economy and how it will affect the market. If the growth is strong, then the extra supply can be absorbed a lot faster, therefore turning the market around quicker too.

You can see in the following two examples on how this can affect the decline:

1. If the GDP grows at a 4% rate per year between now and 2012, the median square foot price for non landed homes in CCR will fall 17% within this time frame.
2. If the GDP grows at a 6% rate, then the median price will decline 8% between now and 2012.

Most developers seem not worried by these predictions right now as many haven’t bothered to slash their prices just yet. According to the Urban Development Authority some 8,000 non landed homes will be completed this year. In 2009 there will be 12,000 more, some 16,000 in 2010 and 20,000 in 2011. This opens up massive pot of new yet to be build real estate, creating massive oversupply in Singapore if the economy happens to grow at a slow pace.

While Cushman & Wakefield argues that now would indeed be a good time to buy, JPMorgan’s analyst Christopher Gee disagrees. “The fear of making a purchase now, only to have prices fall later, is what’s holding buyers at this stage.”

In the end, it is investors who have to decide whether they prefer to hold or jump in head first in the hopes of making a nice profit.