According to one property expert, the throngs of new immigrants to Singapore will continue to spur demand, preventing prices from falling despite the wave of new flats entering the market.
(The influx of people will ensure demand for new homes, so prices are unlikely to fall, according to Dr Chua)
Head of research at Jones Lang LaSalle (JLL) South-east Asia Dr Chua Yang Liang explained that history has shown Singapore’s housing prices are driven mostly by sentiment, not just stock levels. Strong demand will allow the sector to thrive amidst an estimated influx of 100,000 homes – both public and private homes – that will complete come 2014 and 2015, he said.
These new homes will impact prices and might slow the gain in the Urban Redevelopment Authority’s (URA) property price index to a rough average of 1.8% to 7.5% a year from now until 2015 – depending on immigration inflow.
However, given how the growing population has outpaced the increase in housing numbers, demand will probably stay strong, added Dr Chua. He said the population has expanded by some 2.8% on average in the past decade, while the number of completed homes has increased by 2.1% a year.
Dr Chua’s view goes against that of many industry analysts, who maintained that prices look set to fall in coming years, especially in the mass-market segment where most soon-to-be-completed homes are. They find the market cyclical, and that ups and downs are unavoidable. One commented that given current economic uncertainties, there is more than a 50% chance of a correction in the next three years. The bumper crop of state land released and the ramping up of new HDB flat launches have prompted some to forecast plunging suburban home prices by as much as 15%. However, recent global economic uncertainties (and the consequent weakening of the share market) have raised doubts that the market is sustainable.
Dr Chua commented that the market is ‘fairly resilient’; it has only corrected in the past due to external shocks like the bursting of the 2000-01 dot.com bubble and the 2007-08 global financial crisis, which saw prices diving. He added that even during a period of healthy supply, like in 2003 and 2004 where about 60,000 completed homes were available for owner-occupation or leasing, prices remained flat and refused to fall.
Meanwhile, despite expectations of slowing immigration, the influx is unlikely to halt entirely, as these people are needed to support Singapore’s economic growth. This means housing demand will be kept stable enough to support the injection of new supply over the upcoming years, observed Dr Chua. “Undoubtedly, the current increase in global economic uncertainty is likely to dampen sentiment here, resulting in short-term fluctuations in demand and prices but, overall, the mid- to longer-term outlook remains stable on the back on these fundamentals,” he said.
JLL estimates that even with increased housing supply, demand will still be greater until 2015, as cumulative housing stock shortage had ballooned to about 87,000 homes last year. This assumes a tighter immigration policy, with the population growing to 5.2 million by 2015.
Dr Chua advises that policymakers to continue releasing land to support the development of between 16,000 and 24,000 new homes a year, depending on immigration levels.
An interesting note is that the rental market will likely see an oversupply over the next few years regardless as a significant number of buyers have bought units as investments.
Whether this trend will have an impact home prices will depend on future economic development.
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Related Categories: HDB and Public Housing, Buying
Tags: condo singapore, Dr Chua Yang Liang, growing Singapore population, HDB Prices, housing market in Singapore, housing trends in Singapore, immigration, JLL, Jones Lang Lasalle, property Singapore, Singapore HDB, Singapore housing demand and supply, Singapore private homes prices, Singapore property prices
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anonymous said...
The growing population has outpaced the increase in housing numbers only for a 5 years period of time and it is not given. This expert like all other seller side experts tends to omit the fact that immigration will slow down both because of new tightening on EP and PR approvals numbers. Numbers of PR approved fell 63 per cent from 2008 peak to 2010 and will probably continue to fall in 2011.
September 18, 2011 5:46:00 PM
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