The predicted decline marks a significant correction from the 11.5 per cent increase in prices in 2013, with prices in some top tier cities rising over 20 per cent last year.
National sales so far this year were described by S&P’s analysts as “dismal”. Year-on-year residential property sales declined 10 per cent in the first three months of 2014, compared to growth of 26.6 per cent in 2013.
However S&P believes that, overall, property sales volume will rise 10 per cent in 2014, with stronger sales growth in the second half of the year on the back of price cuts as developers seek to meet aggressive sales targets for the year.
S&P believes compressed margins will become a structural trend, as tougher operating conditions prove most difficult for smaller developers, while bond markets are expected to remain open to larger developers with a track record.