Cooling measures in SG? One more year at least says Capitaland Ltd

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house-price-to-incomeThere are no signs whatsoever that the cooling measures in Malaysia is about to be lifted. I would personally be looking at Singapore instead. Once they decided that it’s time to lift their cooling measures, perhaps the property prices has really dropped enough. The reason? The home prices, except for those who managed to get a HDB flat allocation is pretty high. Do look at the most unaffordable city in the world for home prices. (Image)  The full article was published in Bloomberg just a week ago. Read here: House price to income ratios  Singapore is nowhere near the top 5 though. It’s only 7th. Kuala Lumpur? Already high, actually. As per Numbeo, it’s 8.74 times Price to Income Ratio. Fortunately the choices are aplenty unless everyone must stay within the few popular areas or even the city centre also known as CBD. Do note though that transportation and toll would add into the affordability too.

In one latest article in The Business Times, the president and CEO of CapitaLand Ltd was speaking in a Bloomberg Television interview and he said, “We see volume picking up and the price declines have slowed. We see this trend continuing for 2017. There is no compelling reason for the government at this point to make major changes.” Capitaland reported net income up by 74 per cent to S$430.5 million (RM1.35 billion) in the three months ended Dec. 31. Revenue rose 7 per cent to S$1.9 billion. For the year, net profit rose 12 per cent to S$1.2 billion. The developer has more than 8,000 homes ready to be sold in China and expects to hand over 6,000 this year, the company said.  Currently, the government of Singapore capped the debt repayments at 60 percent of a borrower’s income as well as higher stamp duties. This is expected to continue to help cooling the market.

apartmentWant to know what’s a typical home price like in Singapore today? Well, a typical 1,000 -1,200 sq ft apartment with facilities in Singapore today is S$1 million (RM3.14 million) or higher. Please refer to the image from Singapore’s main property site, propertyguru.com.sg  The median income of a finance manager in Singapore? It’s S$82,786 as per payscale. In brief, these apartments are considered unaffordable. The situation is similar here in KL, especially within the city centre. Seriously, most junior managers are earning incomes which are far away from the home prices. This is the reason why governments are still keeping the cooling measures. Would it reduce the prices so much that it becomes affordable? I personally do not believe so. The reason is because the demand for these sought after properties would be there and as soon as there are some correction of prices, it would be snapped up. Except of course when there’s a financial crisis. Else, based on usual employment numbers and continuous GDP growth, rest assured that demand remains strong. Do look up some of these condos within KL city centre to get an idea. Happy viewing and investing.

written on 20 Feb 2017

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