While Singapore's property market has shown signs of cooling, with volume of new private home sales halving this year, it has defied expectations of a sharp correction.
Developers sold 7,137 private residential units in the first 11 months of 2014, with sales expected to total 7,500 by year-end – a 50 percent on-year drop, driven by weakening demand.
Prices, in contrast, have proved relatively resilient as developers and private home sellers stand their ground.
Private home prices edged down just 0.7 percent on-quarter in the three months to September, marking the fourth straight quarter of falling prices. Declines, however, have been measured. For the first three quarters, prices decreased by 3 percent.
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Looking forward to 2015, the market will to continue to contend with headwinds from a glut of supply and buyer caution, say analysts. Prices are set to continue their downward trend, but don't expect a crash, they note.
"Next year is not only Singapore's 50th Independence celebration but also potentially an election year," Yvonne Voon, analyst at Credit Suisse said.
As such, the government will work to ensure prices do not rise or "crash meaningfully" by keeping property cooling measures intact and fine tuning them if necessary, she said.
Property is a key component of household wealth in Singapore, with 47 percent of household assets tied up in real estate, according to Credit Suisse. Therefore, the government is unlikely to compromise the wealth of its population ahead of an election, Voon said.
Where are prices headed?
While Voon predicts prices will remain "flattish" overall, there may be pockets of weakness in the market.
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Prime property prices could decline 5-10 percent, she said, given vacancy risks arising from weak rental demand and unsold units.
"Declines may be steeper especially the larger units (those with over three bedrooms), but partly offset by stronger demand for the smaller units," she said.
Mass market prices, on the other hand, will trend sideways, she says.
"We expect the projects with better offerings (such as close proximity to MRT stations) to experience more resilient pricing levels (potentially up 5-10 percent) while less attractive projects may see some pressure from relatively poor demand," she said.
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The record completion of public residential projects could also deter some demand from mass market private housing, which could again pose risk to prices within the segment, Voon said.
Burgeoning supply
An estimated 50,300 new residential units are set to be added to the market in 2015, followed by 71,500 in 2016 and 37,200 in 2017.
This points to a heavy oversupply situation ahead, said Eli Lee, analyst at OCBC.
With average population growth at around 75,000 individuals per annum from 2014 to 2020, and assuming a conservative 3 persons per household, this translates to an incremental demand of 25,000 physical homes per year, he calculated.
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Lee expects the supply overhang combined with the prospect of higher interest rates will keep buyers on the back foot over the next couple of years. He forecasts home prices to fall 10-15 percent over 2015-16.
A price crash in excess of 20 percent is improbable, he says, given the high price elasticity of demand in the housing market.
"We will likely see significant buyer demand coming into the market at lower price points," he said.
Buyer sentiment
For now, buyers remain on the sidelines, said Jin Kaur, property agent at Century 21.
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In the resale market, there is a mismatch between what sellers are asking and what buyers are prepared to pay.
"Buyers feel the market will come down so they are just waiting. Sales transactions have come down tremendously. I've been doing more rentals transactions than sales," she told CNBC.
Meanwhile, foreign buyers, who have been a key driving force in the market in recent years, are staying away.
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"Overseas buyers have run away because of the property curbs," Kaur said.
Last year, the government increased a tax on foreign property buyers as part of efforts to cool the market. Foreigners are subject to an additional buyer's stamp duty of 15 percent of the purchase price, up from 10 percent previously.