2020 private home prices likely to see minimal fluctuations?

Interest rates have remained low this year and as household incomes grow, home loans become more accessible to a larger pool of buyers and this could have contributed to the continued rise of home prices despite a round of cooling measures last July.

Low-interest rates and rising household income boost home prices

Analysts are expecting private residential prices in Singapore to rise by 2% in 2020 and also in 2021. In 2018, private home prices climbed 8%. However, the economy has been lacklustre since then and this is also reflected in the reduced growth of the property markets here.

Last July’s property cooling measures had suppressed the rise of home prices. The quick pace at which home prices were rising in the earlier half of last year may have prompted the government to roll out the cooling measures mid-2018.

Corals at Keppel Bay condo in Habour Front area, Singapore. Picture: iProperty

Corals at Keppel Bay condo in Habour Front area, Singapore. Picture: iProperty

Will authorities issue fresh property curbs if prices continue to rise?

Without a doubt, the government is monitoring the local property market carefully in order to prevent a bubble from forming. How likely are the authorities to implement a fresh round of cooling measures should property prices here continue to rise? A quick and large increase in the supply of new private homes is also expected to occur next year, and as interest rates are not expected to rise further, will this balance out market growth?

As unemployment rates remain low in Singapore and household incomes continue to rise, coupled with the suppressed interest rates, buyers’ affordability may increase. It is yet to be seen how private residential prices may react to the influx of new units into the market next year.

Population growth has however remained limited and the rental markets and potential yields of units purchased for investment purposes may see consumers reconsidering their purchases.

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