The Year of the Ox begins later this month but the bull run is already over for Singapore's property sector, described as the world's hottest market just two years ago.
Prices of private homes fell 5.7 per cent in the fourth quarter, following a 2.4 per cent drop in the preceding period, according to latest data from the Urban Redevelopment Authority (URA), the state agency responsible for land use planning.
The fourth quarter marked the sharpest drop in home prices in a decade, URA said.
"Further contraction is on the way," analysts from the Hong Kong-based CLSA brokerage and investment group said in their outlook for the property sector.
"We continue to expect the URA index to see an accelerated fall in the next quarter," they said.
Local home prices have not fallen so far since 1998 when Singapore was stung by the Asian financial crisis that pushed the local property sector into a slump lasting until 2005, when the government approved the construction of two multi-billion-dollar casino complexes.
By 2007, real estate giant Jones Lang LaSalle was describing Singapore's market as the world's hottest, and the city-state's property prices surged 31 per cent.
Rents at condominium units favoured by the many expatriates here also dramatically increased, and in some cases doubled.
While fourth-quarter data is preliminary, analysts say the casino-inspired property boom is history now that the economy is in a recession.
Analysts said the duration of the current property slump was difficult to predict but they agreed it will hinge on when Singapore pulls out of the recession.
"A lot of it depends on the economy," said Ong Choon Fah, executive director for consulting and research with DTZ real estate consultancy.
"The economy really underpins the market... People have to feel safe about their jobs. That is the first thing," she said.
Serious buyers see pockets of opportunity in the current slump but are being unusually cautious because of the recession, Ong said.
Property agents at a show flat for a yet-to-be built condominium, located less than 20 minutes' drive from the main Orchard Road shopping belt, said they were hopeful, despite the dismal market. "There will always be buyers even in a tough market and our prices are rather attractive," said one agent, who did not want to be named.
A two-bedroom unit at the condominium, which will come with a heated swimming pool and a gym, sells for about S$860,000 (Dh2,119,113).
In good times, the 915 square-foot apartment could fetch at least S$915,000, the agent said.
At another condominium project, launched last year, prices have also eased substantially. A one-bedroom unit measuring 624 square feet is priced at around S$800,000 – compared with almost a million dollars before the slump, the agent for the project said.
Some unsold units remain and the developer is offering incentives, including the absorption of interest charges in the first three years of the loan, providing the mortgage is taken with a preferred bank. Until the economy recovers, prospective property buyers are likely to hold out in hope of better bargains, said Song Seng Wun, a regional economist with CIMB-GK brokerage.
"I think it's a natural reaction to any big-ticket spending," said Song. "If you are not in a hurry to buy, you will want to wait."
Singapore's economy shrank 12.5 per cent in the fourth quarter on a seasonally adjusted annualised quarter-on-quarter basis, its biggest contraction since records began in 1976, the government said.
The city-state was the first country in Asia to fall into a recession when figures released in October showed two straight quarters of economic contraction.
Trade dependent Singapore has suffered as exports to key markets, including the US and Europe, have fallen during the worst global economic crisis since the Great Depression of the 1930s.
Earlier this month, the government again slashed its economic forecast for 2009, predicting something in the range between a contraction of two per cent and an expansion of one per cent.