The government announced this year’s Budget 2019 just last week, and the debate on this year’s is strong.
How will some of the decisions and new measures impact the property market?
Rental market may be affected by a smaller foreign workforce
One of the main causes for concern could be the shrinking foreign workforce.
The government has announced the lowering of the Dependency Ratio Ceiling (DRC).
While this may seem like a move that impacts the local commercial economies the most, it could also indirectly affect the rental market.
The reduction in the DRC in the service sector will further lower the total number of foreign to local, employees. This change will be implemented in 2 steps to allow companies to readjust their strategies.
The ratio will be lower from 40% to 38% in January 2020 and further to 35% in January 2021.
Will this mean a gradual dip in tenancy while the number of completed homes and HDB flats which have reached the end of their minimum occupation period (MOP) are set to rise over the next 2 years?
This could mean fiercer competition and dips in rental prices in the time ahead.
Higher building costs could lead to increasing housing prices
The effects of global warming could be creeping in insidiously over the next few years as Singapore plays her part in implementing the Climate Action Plan.
The Climate Action Plan was launched in 2016 and aims to mitigate and adapt Singapore’s infrastructure to the impacts of climate change. This means more green buildings and rising low-lying roads near coastal areas.
The direction the building and construction industry is taking could, however, mean higher infrastructure costs for developers. This costs could, however, be passed on to the consumers who in turn will find themselves faced with higher housing and maintenance costs.
On more positive notes, however, the government’s roll-out of the Merdeka Generation Package may enable more senior Singaporeans aged between 60 and 69 years of age to save more on medical fees and thus indirectly put aside more monies for housing costs.
This may mean fewer elderly citizens will be forced to sell their flats or downgrade. The provision of rebates on HDB flat conservancy fees may also turn more buyers from the private to the public housing market.