Today, The Straits Times published that a record 18,400 new homes is expected to be completed in Singapore this year. This figure surpassed the previous high of 14,600 units built in 1997, according to Urban Redevelopment Authority data. Will the avalanche of new homes cool property investment in Singapore?
Coupled with the slew of policy measures implemented by Singapore government in recent years, the red hot property market seems to cool down a bit. Although the number of transactions for resale and sub-sale transactions dropped in the last few months, private home prices still remain high. Analysts expected private home prices to post a moderate rise of about 3 – 4 per cent this year.
Investing in Singapore properties
Every market has its cycles. Gold, silver and equities have their rises and falls throughout history. Property is no exception. The current property market has been on an incredible bull run since the United States banking crisis in 2008. Hot money resulting from the Quantitative Easings had entered Asia countries and caused housing bubbles to be formed.
In HDB Singapore, prices for landed and non-landed homes have rocketed to unprecedented levels. Medium cash-over-valuation (COV) for resale HDB is now $30,000 and there were reported cases of Bishan flats being sold for a million dollars. The investment demands are not fuelled by normal market supply and demand. To counter this, the government has rolled out a series of cooling measures to tame the investment demand from buyers but to no avail.
To buy or not?
Obviously no asset can go up forever. Nobody can predict accurately when the bubble will burst for Singapore’s properties but when that day comes, it is going to be a very devastating event.
The current property market in Singapore is nearing its peak and its downfall is inevitable. If you are buying a private home in Singapore for investment purposes, it might be prudent to wait for a better opportunity to enter the market. After all, property is an extremely illiquid asset and if the market turns bearish suddenly, you might not be able to rent out or sell the property. If this happened, your prized asset will become a nightmare liability.
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