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Singapore Real Estate Market Review October 2010
The property market in the larger Asia has defied all odds and registered impressive results in the first three quarters of 2010 despite the global economy showing little signs of recovery. Nearly all the real estate markets in Asia continue to be an appealing option for home buyers and investors alike whether for rental or for investment purposes.
The Singapore economy continue with the brilliant performance witnessed in the year 2010 with buyers demand for properties still high despite the measures that the government has put in place in the resent past to stamp speculative demand. Though the prices have been stable in the 3Q 2010 demand has been strong across all the sectors fuelled by positive sentiments of the economy and the government has matched this with more release of land and developers have not been left behind they have lined up more launches to match the demand and take advantage of the prevailing market conditions.
The government attempt to even out demand and supply will continue to exert downwards pressure on the current home prices. Indeed most of these measures have been effective and the markets have responded positively in favour of the rules though drove speculators back to the drawing board. In September alone the Urban Redevelopment Authority released two residential sites for sale this will be significant in the supply side going to the final quarter of 2010 and the envisaged supply of 16000 units will not be far from actualization.
Following the good turnaround of the economy to a growth of more than 18 per cent measured on q-o-q basis commercial and residential properties market has seen surge in demand as manufactures increase production but the traditional drivers of growth in the economy pharmaceuticals and electrical reversed some of the gains made in the first half of 2010, analysts however expect that the gains made in the property market will continue to be registered up to the end of the year.
In 3Q sales have performed well as pent up demand from both residents and foreigners went up helped by good measures put in place by the authorities to stamp speculative selling that will distort the market prices. The current prevailing prices have brought back the much needed confidence from the home buyers especially in the mid-range categories who are still interested in a good first or second buy as prices remain relatively stable. In 4Q more buyers are expected to show interest in non-landed properties as interest rates have remained attractive and it will be easy to repay the loans for majority of the buyers.
Just after buying over 80 landed properties in the 2Q 2010 foreign residents’ interest in this sector remain strong going to the final 4Q 2010.The performance of this group of investors have been impressive and has not been affected by the short term price fluctuation and subsequent corrections. It is expected that property prices will show marginal increase in the fourth quarter 2010 and the investors could still make capital gains. This group of investors will drive prices up especially in the luxury properties not necessarily driven by any fundamentals but the desire of the owners to buy just the best and well located properties. This is the only sector we can expect not to respond to the government measures in the short run. This sector will still pull up to 5-8 percent price increase towards the months to come as economic fundamentals remain strong and companies register more head counts and an improvement in incomes.
Prices across all the sectors have generally been stable though rose marginally as compared to the previous Q this is because prices of all properties have been high in 2010 as compared to any other year. After the economic recession witnessed last year the property prices rose to all time high and with the buyers demand still rising prices have remained high in the past three quarters of 2010.
Prices for private residential while have remained stable in response to the authorities measure are expected to rise marginally above the 5.3% registered in the 2Q this will be supported by the pent up demand currently experienced in the market and delay in completion of the launches that we expected to be complete by the 4Q.
Non- Landed properties have been the preserve of foreign buyers and high end spender residents will still show market rise in prices with more than 5.0% expected in this sector as more foreign buyers especially from China troop to Singapore to buy. Condos and apartments prices will most likely go up by more than the previous registered figure of 5.0% especially in the CCR regions. The rest of the regions will experience stable prices and could pull up marginal price increase of between 4-6% measured on q-o-q basis relatively the same figures from the last half of the year.
The most responsive sector to the government rules will be in the mid- tier homes as the property buyers in this segment will to a large extent buy public housing and the government has been able to influence the price direction in this property segment. Prices may fluctuate as demand increase following the good run of the economy but the buyers will be interested in good buys and this will be indicated in the projects that price well and are expected to move considerable units before the end of the year.
The government will not be able to influence the prices in the high end property sector not in the foreseeable future. The prices will be largely be influenced by the outlook of the economy and the inflow of foreign buyers who are keen on taking substantial luxury units. As seen the last quarter’s most of the high end buyers will go for the landed properties that are well positioned particularly in the CCR region and price increase could as well be above 7% as compared to the 2Q 2010.
Residential properties rentals are expected to continue the upward trend with over 6% increase expected in the 3Q and will continue to the end of the year boosted by the good prevailing economic growth and pent up demand for units. The increase in rent will be sustained as tenants move from one unit to the other, normally the landlord will increase the rents and as long as landlords do not take the offers in the market rents will continue on a growth trajectory towards the end of the year.
Luxury rentals are expected to head north as more and more buyers prefer these apartments and condos and therefore demand will always be more than supply and foreigners generally would prefer these to the other categories of properties.
Developers and the government have pushed supply in the pipeline to an all time high in 2010 and lined up more in the next three years in order to match the current demand to prevent price increases to unsustainable levels. Of the 61,831 units in the pipeline in the next three years nearly half have not been sold to date, however developers remain optimistic that more stock will be moved by the end of the year.
The government has released about 20 sites under the Government Land Sales (GLS) by September 2010 that could yield more units to satisfy the glowing appetite for homes; these sites can add more than 14000 units into the supply of homes in the months to come. This growth is healthy and the anticipated supply could provide the market with an assurance that enough units will be available as the economy makes a recovery.
As developers try to beat the end of the year period more units are expected to be completed in the 4Q 2010.As seen in the 2Q and 3Q with more than 8,000 units of uncompleted units launched for sale the initial projection of more than 14,000 units could be achieved easily in 2010.The developers may have withdrawn from their cautious mood after the economy showed resilience in 2010 and the market performance has caught many surprised but those who had made launches earlier in the start of the year had a better run in sales in the last three quarters of 2010.
Towards the end of the year price pressure may ease as the authorities take cognizance of the measures put in place to reduce prices to sustainable levels however this is expected not to be the overriding factor as growth of the entire sector is important to the overall performance of the economy. With the rebound of Singapore economy and the economies in large Asia then the government needs only to control inflation and the markets will perform optimally and the government and the developers will be able to move more stock of homes that may not be taken by now. The economy will show swings as the global economy recover from recession but this is not expected to be a major concern not until 2011.
Buy, Sell, Rent, Invest, In Singapore
Billy Chen
CEA Registration Number : R029372I
Tel: (+65) 88689999
Fax: (+65) 64021826
billy@billychen71.com
KF Property Network Pte Ltd
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