18 June 2011

Singapore’s Property Market Headed Towards a Perfect Storm?

source from: http://sg.finance.yahoo.com/news/Singapore-Property-Market-cnbcwp-3875703083.html?x=0

From what I read from Singapore Yahoo Finance, I truly understand the current Singapore property market will be in another down cycle and hit the low at 2013/2014. So now I am waiting for the time to come so that I am able to purchase property in Singapore. 

For those first time buyers, please be patience so that you are able to purchase property in a cheaper price as Singapore government is now increasing supply to property market and it will further reduce the property price or COV. So, now it's our time to save money and wait.

'When a country registers a 15 percent growth rate, as Singapore did last year, there is bound to be a lot of the feel good factor going around. And Singapore's housing market is cashing in on this big time -- prices have rebounded 50 percent in just two years, according to the Urban Redevelopment Authority, and cooling measures by the government have done little to calm them.

At a recent real estate conference organized by National University of Singapore, which explored the theme "Will the boom never end," Chua Chor Hoon, Head of South East Asia Research at property consultancy DTZ, said the Singapore residential market is not likely to decline much because of strong economic growth, but she also outlined a worst-case scenario, which could unfold as early as 2013-2014. "If all the ingredients come together it will make a perfect storm."

These ingredients include falling demand, more supply and higher interest rates all kicking in together.

Interest rates in Singapore are currently at record lows because lending rates in the city-state track U.S. monetary policy. That's allowed some home buyers to pay less than one percent in the first year of their loans, says Chua. Most analysts, however, expect interest rates to begin moving higher later this year.

Second, in 2014 an unprecedented number of housing units are expected to enter the market. According to the URA's latest quarterly report, 32,359 units will be completed over 2013 and 2014 that is 85 percent more than the 17,501 units expected over 2011 and 2012.

Add to this the fact that Singapore's price-to-rent ratio has increased from 20 in 2009, during the financial crisis, to 25 currently, according to URA and DTZ research. That means it will take 25 years for a home buyer to recover, through rents, what he paid for the house. As a result, Chua says, people investing in this market often have a short-term view looking to "flip" the property for capital gains.'

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