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Thursday, 23 April 2009

Home prices to fall more

BUYERS snapping up homes in recent weeks may be jumping into the market way before it has reached the bottom, says new research.

Real estate consultancy DTZ is tipping a gradual property market recovery only from the middle of next year so people buying now could be spending more than they need to.

The firm bases its view on a new report from its Asia Forecasting unit. This shows how a slump - or recovery - in the stock market is always mirrored in the property market, but only after one or more quarters.

Or to put it more bluntly: the housing market will not recover until at least one quarter or even a year after the stock market recovers.

And as any stock market investor knows, the Straits Times Index is well down on its 2007 peak, even though it has gone up slightly recently.

'The STI reflects people's view of the economy so its recovery will really depend on clear signs of an economic recovery,' said DTZ's senior director, consulting & research, Ms Chua Chor Hoon.

Experts have long noted that a recovery in the stock market typically precedes an economic recovery, with a recovery in the property market after that.

'It's all corelated in one way or another. The stock market is usually the earliest indicator but it's not hard and fast... its timing might be off,' said Daiwa Institute of Research analyst David Lum.

DTZ's study also underlined the high levels of unsold stock held by developers, another drag on prices and an eventual recovery.

DMG & Partners Securities investment analyst Brandon Lee sees the property market bottoming out only in the first half of next year.

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