26 July 2014

Singapore Property - Still a Long Way to Normalize - July 2014

Since Singapore government introduced total debt service ratio (TDSR) of 60% this year, the whole property market in Singapore seen a slow down. Both private and HDB resale index showed a decrease of single digit drop so far this year. The sector that suffered most is the luxury properties which seen about 20% drop from the peak. It shows that the mass market is still not affected much by the cooling measurement, in fact most of the investors still waiting patiently for entry point.

Wing Tai chairman recently urged Singapore government to withdraw the implementation of additional buyer stamp duty (ABSD) as his argument was that the TDSR implemented after ABSD was sufficient enough to block speculators flowing into the property market. There are still a lot of buyers which to buy the property for long term investment purpose.

In my own opinion, I think Singapore government has taken the lesson of last election where most of the citizens criticized on property price rising as well as inflow of foreign workers / talents in robbing their homeland & jobs. With these two main policies in place (labor tightening policy & real estate cooling measurement), I believe it is still long way to go for Singapore property market to normalize. Most of the citizens, especially young generation still waiting for their best buy for BTO projects. With next election coming soon (year 2016), I do not think it is going to have any major changes for current policies in place.

The other issue is that Singapore and Malaysia government are trying to reduce the traffic in causeways by increasing the toll fees & VEP. I believe this gives another thought for those working in Singapore thinking to move to Iskandar Malaysia. It may further strengthen the Singapore rental market. The only hope now is for the MRT linked to JB by 2019. But so far I still do not have any concrete plan from Malaysia side. Nonetheless, let's hope for the Singapore property market to stabilize soon and private developers would benefit from here while they try to get consistent cash flow from property investment.

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