Population is always a strong determinant for the property market of any country. Strong population growth will ensure demand increases and when there are some years where there were insufficient supply of units, the prices went up and seldom comes back down. Seriously, who would want prices to fall after it has gone up? Read here: Hard for property prices to go down lah… I read an article in propertyguru.com.sg about Singapore’s annual population growth which was only 1.2 percent in 2015. Between the periods of 2006 to 2012, it was 3.2 percent. As per property consultancy JLL, due to this, the annual housing demand dropped to 16,000 from 38,000 units previously. Demand is thus down. Housing supply is however up as the Singapore government continue to supply 50,000 units per year from 2014 to 2018.
JLL predicts that the prices in prime and mass market will fall between five to 10 percent more before recovery starts in 2017. The mood in the market has been affected by the government’s cooling measures. It was not just the locals because when Additional Buyer’s Stamp Duty (ABSD) was implemented, the foreigners share of purchases in the central region fell to just 10 percent from 20-25 percent previously. High end homes prices feel by 20 percent after ABSD. With the Total Debt Service Ratio being cut, this resulted in the home prices for the mass market dropping by 12 percent. Moreover, prices of high-end homes fell by 20 percent following the introduction of the ABSD in 2011, while the implementation of the Total Debt Servicing Ration (TDSR) in 2013 has resulted in mass market home prices dropping by 12 percent.
I tried to search for some recent news report about potential property bubble in Singapore. There were none. I think the cooling measures are working well and prices are retreating in an orderly manner. We should however watch closely when would the Singapore government tweaks its current cooling measures. I think the same may happen in Malaysia too because the cooling measures has been in place for Malaysia for as long as that of Singapore. The only issue perhaps would be liquidity. Bank Negara Malaysia has maintained the Overnight Policy Rate at 3.25 percent to keep its accommodative stance for the economy. It is also trying to help the market by cutting the Statutory Reserve Requirements (SRR) from 4 percent to 3.5 percent effective February 1. This should help the property market a little; banks would have more funds to lend. Wishing everyone success in their loan applications, as long as everyone is buying within own affordability.
written on 23 Jan 2016
next suggested article: If Singapore eases cooling measures, what about Malaysia?