It might have seemed unthinkable a few years ago, but Singapore house prices are on the slide. Prices of private residential properties in Asia's second-most expensive housing market, after Hong Kong, dropped by a further 1.0 per cent in the second quarter after a 1.3 per cent decline in the previous quarter. This marked the third straight quarter of decline, according to Urban Redevelopment Authority (URA) data - and Singapore property's longest losing streak in five years. In a sign that vendors are prepared to meet the market, transaction volumes increased by 15.4 per cent quarter-on-quarter across the primary and secondary markets, DTZ research shows. Even so, this was still about 60 per cent lower than the number of units transacted in the same period last year before the implementation of the total debt servicing ratio (TDSR) framework. Developers loosened their reins, launching about 20 per cent more new stock in April and May compared with the first quarter. However, buyers remained selective, says Margaret Thean, DTZ's executive director (residential). Healthy take-up was observed only for a few projects that were priced attractively or located close to MRT stations, schools and shopping malls. "With buyers' ability to purchase clipped by the tighter financing conditions, developers have to price their projects realistically and competitively to entice these price-sensitive buyers," Thean says. "Those who are reluctant to lower prices will have to differentiate their products to appeal to potential buyers." Projects launched in the second quarter that saw more than 90 per cent of units sold included Coco Palms, Lakeville and The Sorrento. The Sorrento appealed to buyers with competitive pricing and rare freehold tenure, says Lee Lay Keng, DTZ's regional head of research. Coco Palms is within walking distance of Pasir Ris MRT station and most units launched were priced below S$1 million (HK$6.12 million). In a further reflection that buyers are increasingly price-sensitive, some previously launched projects saw renewed interest after new units were released at lower prices in the second quarter. "For instance, The Panorama and Sky Habitat sold another 100 and 145 units, respectively, in April and May after median prices were reduced by 10 to 15 per cent since they were launched in the first quarter of this year and second quarter of 2012, respectively," Lee says. Similarly, price declines have become more pronounced in the secondary market. Resale prices of luxury condos tracked by DTZ Research fell by 3.0 per cent in the second quarter, bringing the decline for this segment to 5.0 per cent in the first half. Prime freehold condos in districts 9, 10 and 11 fared slightly better, declining by 3.9 per cent in the first half. The price of even some prime freehold landed properties dipped in the second quarter, with declines of about 2.0 per cent observed mainly in the suburban areas. Average rentals for luxury and prime condominiums also fell, by 2.5 per cent and 3.0 per cent, respectively, after holding up in the first quarter. However, despite the decrease in transactions across all buyer groups, purchases by non-Singaporeans, Singapore permanent residents and foreigners, increased by 4.0 percentage points in the first quarter to 29 per cent - the highest proportion since additional buyer's stamp duty (ABSD) was introduced in December 2011 - and in the second quarter accounted for 25 per cent of all sales, according to URA Realis. Knight Frank research shows that foreign buyers have been particularly active in Singapore's prime districts this year as lower prices lure them back. According to Knight Frank's basket of private properties, high-end property prices fell by 10.1 per cent to S$2,120 per square foot in the second quarter. "In District 9, we saw a 135 per cent rebound in transactions to foreigners, and 30 per cent were mainland Chinese - a twofold increase," says Alice Tan, Knight Frank director and head of consultancy and research. This was despite the 15 per cent ABSD imposed on foreign buyers since January last year. "Singapore is still regarded as a stable location for property investment and foreign buyers, especially the wealthy, see greater value now that luxury home prices have come down for five consecutive quarters. And homeowners in the resale market, as well as developers, are more realistic in their price expectations," Tan says. The dip has put downward pressure on rents in Singapore, notes Knight Frank, mainly attributable to a surge in supply and the trimming of expatriates' housing stipends. The upside is good news for tenants who "now possess more bargaining power in an increasingly competitive leasing market". House prices could even ease further this year, Knight Frank predicts, as the TDSR mortgage-cap framework, introduced in June last year, continues to bite. "The government recently made a stand [that it's] too early to relax the cooling measures for now, so it does provide some clarity to the market," Tan says. DTZ also forecasts that prices and rents will ease further this year. "In the primary market, developers are likely to continue to launch projects selectively - they could either hold back or release units in phases - until buying sentiment emboldens. We now expect new launches in 2014 to come in below 10,000 units, which will be a new low since 2008," Lee says. BUYING GUIDE What you can get for S$1 million The starting price for a two-bedroom mass market condominium unit on a 99-year lease, located at the city fringe in Whampoa East, District 12. The UE Development (Bendemeer) property is within a short walk of Boon Keng MRT station, well linked to expressways and enjoys easy access to the array of facilities and amenities found on a mature residential estate. It is also one of the last few developments containing strata-landed property that can also be purchased by foreigners to be granted condominium status. The estimated completion date for the project is March 2016. What you can buy for S$30 million A five-bedroom, five-bathroom good-class bungalow in Third Avenue, prime District 10, one of Singapore's most desired freehold addresses. Embracing an architectural approach of Balinese resort-style living, the secluded property features sculptures, pavilions and an outdoor kitchen with cooker and barbecue pits overlooking the pool.