2019. What will it bring for the local real estate industry?
Will the residential market find its equilibrium, or will there be a recovery?
Government to continue its hands-on approach
The property market was on a road to recovery in the earlier half of the year, with prices increasing steadily month on month. Perhaps a little too quickly for the government’s liking. They imposed a fresh round of property cooling measures in July, hence curbing the quick rise.
National Development Minister Lawrence Wong has said that the government will continue to take a hands-on approach to the property cycle and the industry should not be surprised that they are doing so.
He has said that had the sharp 15% price increase this year been left unchecked, the bull run in the residential market could have continued for 3 years.
This would then have caused an imbalance in economic fundamentals and raised the risk of destabilising the correction later on.
Developers and builders are concerned that the authorities’ intervention may affect not only market sentiments but also increase building costs and cause Singapore to lose favour amongst international investors.
Prices expected to remain flat with declines of up to 3% possible
While analysts are not expecting the authorities to introduce any new measures in the short term, they are expecting home prices to plateau at best next year. A decline of 3% could occur and developers may hold back from aggressively bidding on land next year.
37 collective sale sites exchanged hands this year to the tune of $10.8 billion. Analysts say this number could fall to just 10% of this year’s total.
Developers who have previously acquired land at high prices may be more cautious about bidding for land. Instead, they may in turn pace out new launches in order not to oversaturate the market and tire buyers out. The focus for the real state industry in 2019 seems more aligned to market sustainability.