According to a survey by PropertyGuru, the leading property website in Singapore, 60% of Singaporeans still think prices are too high in Singapore. This is despite the fact that the prices has been falling throughout 2014. Demand is intact however. Majority will enter as soon as the price hits their expectations. They want the Singaporean government to keep the cooling measures too. This happen to be the major cause for price decline thus far. Of course some of the reasons why they also feel so was also because of one external ranking which has ranked Singapore the most expensive city in 2014. Yes, ahead of Tokyo, New York or even Shanghai. Funny thing is, I agree. In both my visits to Tokyo, the hotel prices were really cheaper than Singapore! Yes, I am talking about the 2-3 star types plus the location. I went to Singapore 6 times in 2014, thus my information is quite current.
Coming back to expectations. I seriously do not believe anyone would think that prices are cheap even if it continues to decline in 2015. PropertyGuru said that private home prices would drop a further 5-8 percent in 2015 while that of HDB, another 4-6 percent. Then, it said the developers would have to gradually adjust their prices so their projects are more affordable. For Singapore, this would only be by building more units on the same piece of land because the margin for the developers are nowhere near their Malaysian counterparts. Main reason is land price.
Personally, I think the survey has just shown that whether it’s Singapore or Malaysia or elsewhere, it’s always about sentiment and affordability. When sentiment is very positive, people will somehow stretch that ‘affordability’ up a few notches. When sentiment is negative, they would not just complain but they would also just stand and watch. For 2015, any positive sentiment would have to come from China or at least begin with them. Without a recovering China and the current situation of ever stronger US$, there’s no such thing as a change in sentiment. Thus, I think the next survey by PropertyGuru in Singapore would still show the same two conclusions. Price too high and buyers would only buy when they feel price has become reasonable again. Final question, what’s considered reasonable? Seriously, would the Singaporean government wants the prices to drop to levels of 5 years ago?
written on Jan 22, 2015
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