Some luxury home owners who bought during market highs are now experiencing losses of up to $1.2 million as prices of posh homes take a tumble.
Experts say losses on that scale are sporadic, but noted that the luxury market is clearly softening in the wake of various government curbs.
Flash estimates released by the Urban Redevelopment Authority showed that luxury home prices fell by 2.1% last year - reversing the 0.8% rise recorded in 2012. This is likely attributed to the introduction of heavier stamp duties in 2013, which drove investors and foreigners away from the luxury home market. As a result, just 4,041 homes were sold in the prime districts which feature many upscale homes in 2013, down 20% from 5,094 luxury homes sold in 2012.
Case in point is a 1,679 sq ft unit at Paterson Suites that suffered a loss of about $890,000. It was bought for about $4.5 million in June 2007, but sold at $3.61 million in November 2013. This translates to a selling price of $2,150 per sq ft - a new low for the upscale project.
At the coveted housing district of Sentosa Cove, a 2,820 sq ft unit at The Coast took an even bigger hit of at least $1.2 million, when it was sold for $4.8 million in December 2013. It was bought in January 2011 for $6 million.
Overall, experts expect prime property prices to slide even further as developers move to slash prices. Foreign developers are given two years to sell all units, after their developments obtain a temporary occupation permit. To avoid penalty charges for missing the deadline, developers are left with no choice but to lower prices to move units.
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