SINGAPORE: Prices for private property and public housing fell steeply in the first three months of the year.

In the Housing and Development Board (HDB) resale market, the first drop since 2006 was seen.

HDB's flash estimate, based on its Resale Price Index, showed a decline of 0.6 per cent in the first quarter compared to the fourth quarter of last year, which had registered a 1.4 per cent increase.

Still, some property agents believe the resale flat market will remain resilient.

They said the first quarter decline in prices is largely due more flats being sold below their valuation.

The biggest drop on record though is 4.8 per cent in the second quarter of 2005, after the HDB imposed curbs on cash-back practices, a scam where buyers inflated home loans to get extra cash.

As for private residential property, flash estimates from the Urban Redevelopment Authority (URA) showed prices were down 13.8 per cent in the three months to March.

That was more than twice as steep as the 6.1 per cent decline in the fourth quarter of last year. It also the second consecutive quarter on quarter decline in prices.

"The drivers would really be the slowing to a trickle of new sales we saw in the fourth quarter of 2008, which spilled into January 2009. I think all this happened amid a deteriorating macroeconomic conditions, tighter credit market and worsening job market," said Tay Huey Ying, director of Research & Advisory at Colliers International.

Nicholas Mak, director of Consultancy & Research with Knight Frank agreed: "One of the driving factors for this steep fall in prices is the lack of buying demand. Also, because there are some sellers who are much more realistic, pricing units ahead of the curve to sell their units in the current market."

Based on geographical regions, prices in the "rest of central region" fell the steepest, at more than 17 per cent compared to 6.2 per cent in the fourth quarter.

Prices of non-landed private residential properties decreased by 15.2 per cent in the "core central region", much higher than the 6.5 per cent fall seen in late 2008.

Prices "outside the central region" fell 7.5 per cent, compared to the 5.9 per cent drop seen in the previous quarter.

But analysts note that this is as bad as it gets, as developers have already cut prices significantly.

Although prices will continue to drop, the pace will taper off or moderate in the coming quarters, likely to be in the region of 8 per cent for 2Q 2009, maybe even tapering off to about 3-5 per cent per quarter for the subsequent quarters," said Tay.

Furthermore, the mass market segment is still well supported by HDB upgraders.

Going forward, analysts expect developers to use competitive pricing, or marketing strategies such as rental or price guarantees to move sales.

The flash estimates are compiled based on transaction prices given in caveats lodged during the first ten weeks of the quarter, supplemented by information on the number of new units sold.