UK group: Singapore property rebound likely to be short-lived
September 2nd, 2009 | 
Author: From our Correspondent
According to London-headquartered Royal Institution of Chartered Surveyors (Rics), which represents and regulates property professionals and surveyors, Singapore’s residential market rebound may fizzle out by 2010 due to economic uncertainty and the spectre of higher unemployment.
Though Singapore’s unemployment rate is only 3.3 per cent in June, it looks set to rise sharply in the coming quarters. Based on previous relationships with the world trade index, unemployment could easily climb to 5 per cent by the end of year which will dampen the strength and duration of any sustained house price recovery.
While RICS is of the view that short term strength in the residential market will propel prices higher on an improved global economy into the last quarter of 2009, the duration of previous downturns indicates that further declines in prices may well occur, should global trade momentum fall short in the mediaum term as high debt and rising real interest rates weight on the strength of the global growth recovery.
In contrast, local property developer CapitaLand remains bullish in its outlook for Singapore. In a Capitaland CEOs forum held yesterday, Vice-President of investment Anson Lim told the audience that “the current market upswing is being driven by positive sentiment and supported by long-term fundamentals”.
CapitaLand expects the Urban Redevelopment Authority price index to recover between 5 per cent and 10 per cent for the rest of this year, from the trough in the second quarter.
Singapore’s property market has made a remarkable recovery since a mini-slump at the beginning of the year drove prices down by as much as 40% in the high-end premier homes.
Prices of mass market homes hit a recorded peak recently with a 99-year leasehold project, The Centro at Ang Mo Kio fetching prices of between $1,100 and $1,200 psf. The prices of resale HDB flats have gone up by more than 5 per cent to reach the level seen during the property bull run in the mid 1990s.
The rapid rise in prices prompted Minister of National Development Mr Mah Bow Tan to caution Singaporeans to exercise utmost caution and prudence when committing themselves to buying a property. Despite his warning, Singaporeans continue to flock en masse to property launches.
A property bubble similar to the one in the mid 1990s may be in formation fueled by property developers and agents who are out to make a quick buck.
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15 Responses to “UK group: Singapore property rebound likely to be short-lived”
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actually,if the bubble continue to blow and then burst before election, it may affect PAP. though they can support the market but they can’t support forever.at least, those who read temasek review knows that there is a bubble going on and will be forewarned.
“PAP can fool some ppl forever,PAP can fool all ppl for some time, but PAP can’t fool all forever”
Cannot believe the RIC report..
why cannot?
Because ONLY singaporeans can understand themeselves and their land scarce economics of property
You think those people who buy new property are stupid or what?
OR they cannot think?
Property prices in singapore can only remain steady even if it’s not rising..
It will never fall even if the economy is not that good.
So HURRY UP, buy one asap or you will REGRET very soon that you can never afford anymore… in this life
Prices are up and going…
Despite the Mini bon fiascos , people i see are still tempted by the bubble as seen in recent long queues.
sigh, people never learn.
Doesn’t matter really. Life is all about managing expectations. We have been conditioned to realise that life is not about having a nice car or a big house like in Australia. Neither is it about having a short working week like it is in France. Scholarships and a social elite are natural, unlike in the United States where a black man who was abandoned by his father became President.
Soon houses will be unaffordable, who knows HDB lease may be reduced to 30 years? Doesn’t matter. We have no where to go. Just accept, have a good workout to release some tention and carry on. Anyone who can migrate is not affected by these policies anyway. No other country wants ‘average Singaporeans’ with nothing to contribute in their eyes.
Ok what, if the bubble bursts, the most we get lowered population and some might just be able to upgrade their homes. And if it doesn’t burst, good times for some, won’t hurt me either ways.
The bubble may not burst so soon. I shall continue until Q1 2010. The existing figures can support the trend pass 2009.
The opening of IR in Q1 2010 adds more rosiness to the economy as a whole.
However, past Q2 2010, Singaporeans better get ready to cry. Especially those who bought house in the past few years, they better go hang themselves.
If you have a house now, now is definitely the time to buy.
Be very grateful for the new immigrants who rush in to buy properties.
Now is the time to sell. NOT to buy. Typo.
Lets be honest and stop kidding ourselves. I used to think that property prices will crash anytime soon and that I could afford at least a mass market condo. Having observed for a while i noticed that the prop market will behave just like the SGD – stable apprecation! For a service economy and a centre to store wealth, SG will never allow its property market to crash.
If the administration wants to bring down prices, it could easily make lands available but at the rate lands are released, it can only support the upward movement of home prices. If not, rich indonesians etc would not be parking their wealth here.
Thank god I am not local and have the flexibility to relocate home. Though my income tax is relatively lower here but the tax in the form of extremely expensive housing has left me not much option but to leave.
Watch out for the trends and the truth is all very clear.
Sell now. Wait for the big fall after Chinese New year 2010.
Those who have eyes, watch. Those who have ears, listen. Those who have brains, think.
Second big wave is coming. Those who want to die, can buy property.
Don’t understand the mindset of property speculators now, sucked in by the hype of “PING PONG’ bounce of so-called economic recovery. The sums and anecdotal evidence simply don’t add up. China’s economy is US$3 trillion, US economy is US$15 trillion. The consumption demand of Chinese economy is US$1 trillion and in the case of US economy is US10 trillion. The comparative ratio of a fall off demand in US relative to China is 10 to 1.
Mid-size companies in US and even “recovering” economies like Singapore, Australia etc are still finding financing a very tough game. US consumers who felt “rich” for their asset holding backed by bank financing no longer feels so rich knowing that every dollar of debt counts and asset values can evaporate like thin air. The poor in US has no more access to credit card spending and the middle class now has restricted spending on their credit availability through cards. So where is the sustainability of consumer demand in US and Europe?? The economies in US and Europe is experiencing a “ping Pong” bounce from a big heavy fall – the first one will be the highest, then each succeeding rebound as it hits lows will be lower than the preceeding BECAUSE THE “RECOVERY” IS BASED ON HEAVVY DOSE OF MEDICATION FROM PUBLIC SPENDINGS which cannot last forever. US budget deficit will escalate ahead forcing down US dollar and A RISE IN INTEREST RATE TO SUSTAIN THE US DOLLAR ABROAD AND CONTAINING INFLATION.
China found a lot of lending intended for infrastructure spending went corruptly into stock market, property market and there are anecdotal evidence that even farmers borrowed to stock up industrial metals like copper in their backyard!! The Chinese Government is now terrified and beginning to tighten the string purse and stock market in China reacted violently in the last few weeks – DOWNWARD.
Metal prices eased off this week. I HAVE A STRONG HUNCH THAT THE SO-CALLED RECOVERY UNDERPINNING THE HIGH HOPE OF PROPERTY BUYERS HERE IS NOW ON THE ICE.
It will melt sooner than later.
Better sit tight with money since Government will announce the structural reform proposal soon. It will tell us how much and which sector the Government is no longer emphasizing (where employment hopes have dwindled forward) and what chances of real sustainable recovery will be, how long it will take and the bumpy road ahead.
Cash is kind until then unless one prefers to get sucked into the debt trap of no escape.
There is no more land available in Singapore. Low buildings will have to be demolished and the vacated land will be built very tall building. The landed property market is current being controlled – only citizen and PR with approval can buy. At a point not too far in future, this market control has to be relaxed so that some demands for non-landed can be switched to landed. This is to cushion the rise of non-landed and return the landed with realistic land cost. Presently, the market is distorted. How could a non-landed apartment be priced at $1000-1200 per sq ft and landed house only $500-700 per sq ft? it does not make sense. Once the landed and non-landed land costs become equivalent, Singapore will be like other free cities, e.g. Hong Kong, that very very few rich people can afford the landed and majority can only dream of non-landed apartment. This is real. So, do not dream of prices lowering. If you have the money, it is time to buy now but be selective. Consider the unit land cost rather than the price of the property, i.e. per square ft land cost is the key factor since Singapore is just a small island. Recently, the 900 sq ft 99 years leasehold apartments in Ang Mo Kio area are sold at $1100-1200 per sq ft. What a 1800 sq ft freehold landed terrace cost in the same area? About $1.4 million which is only $778 per sq ft, way below that of the apartments. If you are the potential buyer, do your calculation.
Potential buyers should take a step back and wait till after CNY 2010 to see how things have pannned out in the real economy. But now is certainly the time to sell if you can find a sucker to buy. The sudden jump in prices is unjustified in light of what is happening in the real economy and when Mah BT comes out in the press to say exercise prudence he ain’t kidding. The only people who are bullish are the developers and agents but even some agent friends of mine are echoing the same concerns in private. If sellers keep over-valuing their properties aided by their agents, they will chase away buyers and shoot themselves in the foot. If you buy now, don’t be surprised that in a year’s time you receive a letter from your bank asking you to fortify your mortgage. Maybe too late to try and re-finance by then. A lot of horror stories are being kept off the pages of the ST as the Govt. needs a feel good factor before the IRs open. Good luck and exercise prudence and good judgement at all times. Follow the herd at your own peril. Remember 96/97.
@ rags on Mon, 7th Sep 2009 4:29 pm …GREETINGS…
Your comment….” A lot of horror stories are being kept off the pages of the ST as the Govt……… Follow the herd at your own peril. Remember 96/97..”.
Oh I AM SURE YOU ARE DEAD RIGHT ON THIS ONE. I know of someone who wants me to share a 20% stake in a condo in Bukit Timah area at $1,100 per sg ft – the object was to flip to next buyer within a few weeks. Wants me to Q for that opportunity and he and his family members were busy at work.
I DECLINED but offered to Q for them for friendship reason and ABSOLUTELY nothing else for my time and inconvenience. Guess what? They went ahead. Now more than 10 years later, they were unable to unload it for a 30% loss when I last saw my friend recently.
I am sure a lot of wounded bulls in 1996/1997 still licking wounds at this moment.
There is as much shortage of land then as it is now. How come in this market frenzy, that family syndicate could NOT exit even for substantial loss and some of them quite tight for money?
now isn’t this good feeling of the local property scene generated by prime pumping of the economy by the govt. and yet ma bow tan cautioned the people on the one hand and advised people that HDB prices are set to rise but will keep them affordable? only a nut like him will make such statements. or matbe he is encouraging us to invest in his baby ,ie hdb flats .
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