THE property slump gathered pace on two fronts late last year with rents moderating and private home prices registering their biggest quarterly fall in a decade.
Developers also continued to delay the completion of new flats as well as office projects as the recession tightened its grip.
Prices slumped 6.1 per cent in the last three months of last year, according to the Urban Redevelopment Authority (URA) yesterday, higher than the earlier estimate of 5.7 per cent.
The slump follows a 2.4 per cent fall in the third quarter, which was the first decline in over four years.
Private home prices - which started last year on an uptrend even as sales fell dramatically - dropped 4.7 per cent over the whole of the 12 months. It was a striking contrast to 2007 when prices surged a whopping 31.2 per cent.
The declines will likely continue this year with some consultants estimating that falls of 10 to 20 per cent are possible.
In the fourth quarter, homes in prime districts fell the most - by 6.5 per cent - while suburban home prices dropped 5.9 per cent.
The slump in suburban home prices reflects waning buying interest for mass-market property, said Knight Frank's director of research and consultancy, Mr Nicholas Mak.
This segment was initially expected to hold up better than the high-end segment last year but the mood has become so cautious that some homeseekers are buying HDB resale flats instead, he said.
Rents are feeling the pain as well. Private home rents fell 5.3 per cent in the fourth quarter after a marginal 0.9 per cent decline in the third quarter.
Non-landed homes in prime districts recorded the largest drop of 6.1 per cent with mass-market homes down 4.3 per cent. Overall, private home rents rose 2 per cent last year.
Sales are on the slide as well. A total of 7,701 resale homes were transacted last year, down from 20,980 in 2007 while sub-sales, an indicator of speculative activity, fell to 1,628 units last year, down from 4,097 in 2007.
New home sales went into freefall last year, with a record low of only 4,264 changing hands, down from 14,811 in 2007.
Price declines should be accompanied by increased buying volumes, said Chesterton Suntec International's head of research and consultancy, Mr Colin Tan.
But one reason that is not happening now is that prices have not fallen low enough. To generate demand, the price drops have to be bigger than seen in previous downturns as this is the worst downturn ever, he said.
To add to the gloom, there is also a standstill in the investment market due to the tight credit situation facing developers. 'Those who want to capitalise on the lower prices today still find it hard to do so,' said a market watcher.
The two parallel markets give rise to a divergence in the price expectations of buyers and sellers, he said.
The market will take several quarters to find its new footing with at least some price convergence between buyers and sellers, he added.
This quarter is likely to be a slow period due to the cautious sentiment, poor economic conditions and interruptions by the Chinese New Year celebrations, said CBRE Research.
While the market is expected to stay tentative, the continued price falls should kick-start some sales, especially in mid-tier and mass-market projects, said its executive director, Mr Li Hiaw Ho.
There is no lack of supply, even as developers pushed back the completion of more projects to beyond 2011.
The URA now expects 7,012 private homes to be completed next year, down from an earlier estimate of 8,538. The number for 2011 has been revised to 13,686, down from a forecast of 16,145.
Meanwhile, rentals of office space, shops and industrial properties all fell in the fourth quarter, as leasing interest softened in light of the economic climate.
Further drops in rentals are expected, experts said.