Home prices in Singapore predicted to fall 7.5% in 2015

Home supply also to drop.

According to CIMB, its base case is now for residential property prices to fall by 5% yoy in 2014 and 7.5% in 2015 as mortgage rates and supply completions gradually rise in the next two years.

Here's more:

Taking a balanced approach, we believe that residential property prices are unlikely to collapse to pre-2007 levels. Supply remains an issue and the trend of shrinking unit size in the private segment offers no remedy.

The magnitude of interest-rate hikes is also a wildcard and presents the biggest tail-risk. But assuming that mortgage rates normalise to 3.5%, we believe that the sector is in better financial health than before, with policymakers now adopting a much more prudent stance relative to past cycles.

We expect around 21k private new homes sales in 2013, before falling to 18k in 2014 and 15k in 2015.

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