OCBC: Singapore home prices drop 3-7 percent in 2017

When we look at the property market a regional basis, I always see Singapore property market as the leader of the pack. The pack includes Malaysia, Indonesia, Thailand and of course, Singapore which is already considered an international property market. Leader in this case meant that it would be the market to first implement measures to slow down or even boost the market. As of  now, Singapore’s cooling measures are staying put. Do google for earlier news or read one of it here:   Lifting cooling measures? Too soon: MAS Due to it staying put, the market would remain subdued, right? Well, based on an article the number of transactions are actually going up. This was reported just days ago by Bloomberg. Not the best media but always good to read more. They wrote an article about Iskandar just weeks ago which I disagree. Haha. Here:   That ‘scary’ article about RM100 billion Chinese investment in Iskandar

What about the prices in the Singapore home market then? As per OCBC Investment Research, the private home prices in Singapore should drop 3 to 7 percent in 2017 while rents are falling by 5 to 10 percent. Two main reasons? Persistent housing oversupply and imminent rise in interest rates. Oversupply means demand is not catching up fast enough while interest rates up meant that some may choose not to buy as they would have to pay more every month. I think the Singapore market has been accustomed to low rates for a long time. Thus any rate movements up meant some adjustments in mindset may be needed. This is quite usual for any market at all. Do read the full article  in todayonline here. Most of my friends working in Singapore are staying in HDB flats and as they own just one property, I think any price changes would not affect them much unless they are thinking of upgrading.

The OCBC Treasury Research team expects that domestic benchmark rates, i.e. short-term Singapore Interbank Offered Rate and Swap Offer Rate, for mortgages will broadly rise 80 to 200 basis points from now to end 2020. The OCBC analysts do not expect too much changes in the primary residential sales.It said, “Despite prices continuing their downtrend in 2015 and 2016, the rate of sales appears to have stabilised near that in 2014 (about 1,800 to 2,000 units sold per quarter), with about 5,700 units sold in the first nine months of 2016.”

I would also hope that the property market in Malaysia continue to be orderly and the average prices continue to drop slowly as more affordable homes are launched and sold. Seriously, rising prices are not sustainable and the days of 2009 – 2012 is unlikely to return. The prices are now already at a level which many Malaysians are complaining (KL average at over RM700k is definitely high) and with the current lifestyle, unlikely to be able to afford or even get their loans approved. Read here:  Important question on distance vs affordability and expensesThis is why I make it a point to read about the Singapore property market. Happy following.

written on 11 Dec 2016

Next suggested article:   When three becomes one; Thailand – KL – Singapore

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