Analysts say market near peak
Home prices are close to reaching a peak and could see an adjustment in the next few months, property analysts say.
With spiralling prices, DBS Securities property analyst Winnie Chiu said the affordability ratio had breached the acceptable maximum level of 45-60 per cent of a monthly household income and risen to 62 per cent, indicating the growing burden of financing a new apartment.
Ms Chiu said the fall in people's ability to buy would slow sales activity and the increasing number of flats coming on to the market would arrest recent sharp price increases.
She said last year's strong imbalance between supply and demand was poised to improve this year and beyond, with an increasing number of flats expected to come on stream.
The brokerage expects a 6 per cent retreat in home prices over the next two to four months.
SBC Warburg director Franklin Lam predicted a correction of more than 10 per cent after the market reached its peak, which he expected to see in about three to four months.
Mr Lam also criticised the Government for refusing to intervene in the overheated residential market.
He said the housing market was dominated by speculators, disagreeing with Secretary of Housing Dominic Wong's comments that speculation in the property market was not at a serious level.
Mr Lam said only about 20 per cent of buyers wanted to live in the property they were buying. Home prices had reached an unaffordable level for most end-users.
