Singapore’s Housing Market in Decline
Singapore´s residents are in very crucial times when it comes to their housing market because sales have slumped 42% over the past seven quarters. This has been the biggest decrease in sales since 2002. Many in Real Estate are concerned about the future of the market. The declining prices strongly affect the economy. The brokerage firm of Knight Frank LLP has predicted another 5% drop in 2016, which could be devastating to the people.
Builders Hold Off on New Projects
This lack of sales in new homes has caused builders to hold off building newer homes which have hindered the employment rate in the country. The government residential curbs to lower interest rates backfired because that drew demands by foreign buyers and caused a decline in sales in the housing industry. A lid on debt repayment costs 60% of a debtor’s monthly income. The greater stamp duties on home purchases made it less likely for purchases. This hurt the construction industry because now they are building fewer homes. Home sales dropped to less than half of the normal sales for the month of June.
No Clear Signs of the Market Cooling for Future Sales
The state of the economy is the only hope that the housing market will improve. There are no signs that the market will improve because the wages of the citizens does not seem to be improving. The prices for new homes have declined 6.7 % since September 2013 and fell 4% more last year. This was the first annual decrease since 2008 as quoted by Knight Frank’s agency. Housing values are still expected to drop another 10% this year. The cooling off period for future sales needs a big boost in order to get things rolling in the market.
Bleak Future for Singapore Housing
The government not pitching in to help with easing off on some of their regulations will hurt the industry. Unfortunately, there are no clear signs that the housing market will be relaxed in the near future. The economy of Singapore has gotten worse which makes it impossible for the housing market to improve. The Gross Domestic Product did contract 4.5 % in the last quarter, which was a lot more than predicted by analysts. This compounded with the government sanctions just underlines the worse condition of the housing market.
Buyer’s Point of View
All this compounded with the fact of borrowing costs on the increase has caused the buyers to shy away from purchasing new housing. Buyers are hopeful that within the next year the costs of borrowing will be lower. Many new buyers want to wait and see how the market fares before they make an investment on a new home. Those who already have a home are reluctant to put it on the market at this time for fear that they will have to suffer a loss on their investments. The housing market in Singapore today is on very shaky ground.
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