Fire sales might be on the cards, says JLL.

The ongoing correction in global equity markets might lead to a sharp decline in local property prices, according to a report by JLL.

With the benchmark Straits Times Index (STI) shedding 10% of its value in January alone, the report warned that severe stock market losses might trigger property default sales. This, in turn, would further depress prices, which are already under pressure from a slew of cooling measures.

JLL also cautioned that an extended stock market rout—which is primarily triggered by China’s economic slowdown—will have severe repercussions for Singapore’s economy, which is heavily dependent on Chinese growth.

“Looking back into the past, the residential market for example, corrected by 4 to 6 per cent a quarter in some instances. Should the market lose footing, it is not impossible to expect a recessionary correction of this magnitude,” said Chua Yang Liang, Head of Research, South East Asia.

The report said that if the Chinese economic condition deteriorates further and the stock market haemorrhage continues, the negative impact on the broader economy, including employment levels, may lead to a more severe correction in the Singapore property market.

JLL noted that stock market movement typically leads property market movement by one to two quarters, and recent declines in the Singapore stock market could signal further property price correction in the coming quarters of 2016.

“If this scenario pans out and threatens the stability of the property market and wider economy, it may prompt the government to re-visit its property cooling measures and other macro-economic policies including economic stimulus packages,” Chua said.