According to flash estimates Thursday from the Urban Redevelopment Authority, Singapore's private home prices weakened further in the quarter ended March 31, falling a sharper 0.4% from the previous quarter. Prices fell 0.1% in the fourth quarter of 2003.

The price index of private residential properties slipped to 112.4 points in the first quarter, from 112.8 points in the fourth quarter. This is the index's lowest level since the first quarter of 1999, when it sank to 105.5 points.

The latest data cast doubts on whether Singapore's property prices will recover any time soon, let alone by as much as 10% this year, as some analysts had earlier projected.

With fewer-than-expected private homes sold in the first quarter and prices continuing to soften, some analysts now say prices may stay flat or gain 5% at best - and that's assuming the residential property market turns around in the second half of the year.

"Prices will stay relatively flat in the first half," said CB Richard Ellis Executive Director Soon Su Lin."

"But there is still potential for prices to rise in the second half if the positive outlook for the economy pans out," she added.

The flash, or preliminary, estimates are compiled based on transaction prices given in caveats lodged in the first 10 weeks of the quarter, supplemented by information on the number of new units booked. The URA will update the statistics in four weeks in its quarterly publications on real-estate statistics.

While eight out of 10 Singaporeans live in state-subsidized housing, some also purchase a second private-sector apartment for investment purposes.

Residential property market prices and sales are indicators to the health of private-sector developers such as City Developments Ltd and CapitaLand Ltd, who earn the bulk of their profits from residential projects in the city-state.

While Singapore's economy is forecast to grow 3.5%-5.5% this year, an improvement from last year's 1.1% growth, the URA data suggest continued widespread concerns about job security and weak wages will stifle property purchases.

Despite lower sale prices offered by some developers, there were fewer home buyers in the first quarter, which is traditionally a strong quarter for sales.

Analysts estimate just 500 to 900 new private home units were sold in the January-March quarter, compared with an average 2120 units sold in the first quarter over the past eight years.

Based on caveats lodged so far this year, first-quarter private home sales slumped from 1143 units in the fourth quarter of 2003, but were higher than the 427 units sold in the first quarter of 2003 when sales were badly hurt by the Iraq war and SARS outbreak.

Analysts say this year's private home sales were likely hit by the government's decision to defer cuts on personal income tax rates and the push for flexible wages, as well as bird-flu worries and a short-lived rally on the local stock market.

Some also blamed the dearth of property launches as developers sat out the slump, awaiting clearer signs of economic and employment growth.

The poor first-quarter private home sales leave an estimated inventory of 40,000 vacant private home units (including 8000 planned units) in the market, which could take at least three years to clear.

It doesn't help that there are still some 10,000 public housing units on the market - two years after the Singapore government stopped building new units to clear a 17,500-unit overhang.

This "big imbalance between demand and supply" will keep a lid on private home prices, says S&P Associate Director Yasmin Wirjawan, who expects Singapore private home prices to remain flat at best this year.

Thursday, April 1, Singapore's property stocks ended higher, shrugging off the URA's flash estimates as most investors had already taken profit after piling into property stocks earlier this year on hopes of a sector recovery.

City Developments Ltd finished up 1.6% higher at S$6.20, after touching a high of S$7.30 earlier this year; Rival CapitaLand Ltd was up 1.8% at S$1.71, but off its 22-month high of S$1.81 reached last month; Keppel Land Ltd ended up 2.1% at S$1.91, down from its S$2.02 year high.

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