Prices of luxury homes predicted to fall 7%

Despite thriving demand from buyers.

With developers speeding up new launches and offering attractive prices and incentives, the sales market for new residential flats remained strong during 2Q 2014.

According to a research and forecast report from Colliers International on 2Q 2014, with the double stamp duty adjustment in May, buyers’ sentiment has improved and according to the Land Registry, the market rose an additional 7% during the three-month period ending May

2014.

This follows a 13% quarter-over-quarter growth in the previous quarter.

Here's more from Colliers International:

The double stamp duty adjustment, intended to benefit home upgraders, together with attractive pricing, significantly boosted buyer sentiment this quarter.

This increase will trigger additional launches for the remainder of 2014 and although the government will likely continue to maintain measures to help curb market demand, we predict prices for mass residential properties will drop 5%, with the luxury sector falling by 7% in 2014.

The downside risks of imminent interest rate hikes, an increasing residential supply, and stamp duty measures are working to push home prices down, and will lead to a 5-7% drop in 2014.

With prices dropping, potential buyers may find the properties they desire fall within their price range, thus stimulating sales activity in both the primary and secondary sectors.