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Home | Real Estate Blog | Articles | Video | Forum | Success Goal | 中文
Singapore Real Estate Market Review ( 2 ) November 2010
It has been an exciting year for property investors in Asia and in particular Singapore who have experienced the best property prices and rentals in the last three quarters of 2010. Many economies in Asia have performed exceptionally well when compared to the western countries; the economies have not yet recovered despite the government commitment and stimulus packages put in place by the governments.
The Singapore government interventions have to a large extent cooled the market and now investors seam to be moving to buying properties in Europe expecting the prices to pick up later. Though the property market in Europe is still recovering the investors expect to buy properties in those countries which show potential of quick recovery and many of those investors are heading to Britain where property prices remain favourable.
The property market in Singapore has outperformed other markets around the world for most of the year, but following the government interventions market analysts expect the market to take a breather as the year ends. Many of the investors who had bought units in Singapore are now taking stock after the ’bull run’ in the year. Many of these units’ prices and rents have performed well in the year but with the current demand there are still investors who are willing to invest their savings in areas they expect to make a good return and overseas property have proved to be a better bet for them than home.
Investors in Singapore have shown demand for property across all the various segments and the good performance of the economy has helped the property investors in decision making, but the recent government interventions are pushing the prices down making investors who had initially intended to buy units hold back or seek alternative markets for investing.
The rentals for all the types of homes is expected to decline in 4Q 2010 or could rise at a slower speed as compared to the previous quarters. The rise in rentals for 3Q 2010 was just 3.6 per cent, a decline when compared with the high of 6 per cent rise in the 2Q and the 4.8 per cent in 1Q. This could be due to the fact that rentals and prices of properties could have reached sustainable levels after the government measures started yielding results. Clear values for rental and sales are now better representatives of the market fundamentals and are not driven by the speculators.
A strong economy with growth rate of 13-15 % could still yield enough demand for homes as more buyers look for opportunities to invest savings and more foreign workers take up employment in Singapore. The demand for rentals could be sustained at the 5% growth rate achieved during the fist nine months of 2010 but may increase as more launches and completed units come on board. The current units envisaged to be released in the market by 2013 includes a total of 22,000 units and the delivery of these units depend on many factors, the government and private developers will be watching the market and adjusting the construction plans accordingly.
The effect of the government measures on the property market has been targeted and the desired outcome achieved to a large extent. The number of developer’s sales in September was down by 28 % a significant decline in the month as compared to the rise in sales in August and the first half of 2010. Sub sales declines by 52% as buyers could not move the units due to the limitation on the time one is expected to hold on to the unit before selling, this represented almost more than half decline in the number of sub sales sold in August before the measures were announced. In September only 911 units were sold representing a significant decline as government cooling measures impact takes its toll on sales activity. In such circumstances developers have taken caution and this has been seen in the number of launches done in September. A total of 1,058 units were launched in September, a decline from 1163 units launched in August this represent a decline of 10% and more decline is expected as demand for units decline. Overall the performance of the property market in Singapore could still be exceptional in this year but as experienced in other years the final quarter could be slow in sales but the units sold in the previous quarters could be the best the industry has had in many years.
The developers have already moved more than 12,000 units and an additional units could be moved towards the end of the year and achieve the envisaged 14,000 units. The pent up demand has been sustained to a bigger extent and the market watchers remain optimistic that the measures by the government could have positive impact in the market as more stable and sustainable prices and rentals are achieved.
The property market could still achieve significant performance in the remaining part of 4Q but various policies put in place by the government could come to play and course dip in performance. One of these significant factors is the performance of the Singapore Economy as compared to other major currencies. Following the policies announced in the last few months interest rates have taken a big dip and the increase in the value of Singapore dollar against the American dollar has meant that many investors have to add their earnings in order to buy overseas properties. Inflation could also be averted if the authorities put in measures to contain it as the resent surge in inflation could not be sustained and could result to losses. The inflation recorded in 3Q was 3.2 percent an increase from 0.9 recorded in 1Q 2010 when buyers were optimistic of good performance of the market after the recession of 2009. Through the remaining part of 2010 and 1Q 2011 inflation will remain an issue to watch as liquidity in the economy increase as more people look for alternative avenues of investment as buyers remain cautious investing in properties.
Despite the news coming from the property market the investors have not been dampened and the confidence level remain high among both the buyers and developers who still believe the best times for the property market have not yet come. The uncertain market conditions may affect the optimism but this will depend on the government reaction to the various obstacles preventing the markets from operating at optimum levels. Over 30% of developers still expect the prices to decline by 10 % and are expecting uncertainty in the market as has been seen in the last 3Q. As the government put more measures to contain inflation and speculative buying more uncertain markets are bound to emerge as the economy balances.
The last days of 2010 could see more activities as developers take stock and launch new properties to be constructed next year. But going by the current sales figures there may decline in the units launched as developers have already seen the affect of the government measures and inflation may remain headache for investors who may not have factored such high levels of inflation in their costs.
The main focus of buyers will be overseas properties in the months to come as these markets show promise and buyers are expecting to make capital gains in Europe especially in Britain as compared to home. This can be validated by the many shows and exhibitions that Singapore citizens have been invited of late. The performance of the Singapore dollar will influence the position the buyers take as stronger Singapore dollar will make investing overseas a better option as compared to home.
Market sentiments in the days to come are expected to be moderate in all the sectors of the economy but investors will be keen on the increase in general prices and the resultant measures that the authorities will be putting in place to contain the inflation and the strengthening of the Singapore dollar.
However, property analysts expect no major price increase in the remaining days of 2010 but a greater focus has been shifted to the performance of the economy and the available opportunities across the borders. There are opportunities for investing in neighbouring countries and in Europe which is just recovering from the subprime mortgage crisis but showing greater promise than America. The mortgage crisis in America had deep roots than anticipated, the government has tried to a greater extent but the market won’t recover and return to growth momentum until later in 2011 when the results of stimulus package is expected to become fully evident and operational.
Going forward the Singapore property market is expected to cool because of the measures introduced by government and inflation that may dampen the demand for units both in the rentals and sales but the activity seen in the first 3Q 2010 will be among the best experiences of the market in the past few years and as stock taking time come, the buyers and developers who invested earlier in the year will have something to smile about.
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
CEA Licence Number : L3008430D
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