Property market and Economy = Cause and Effect ?

It has always been thought that the economy, both local and global, has a big part to play in the performance of the local property market. But it seems a recent study by the Monetary Authority of Singapore (MAS), has shown that the link is not all that obvious.

The study has shown that Singapore’s economy may be affected more so by external factors such as exports, rather than our property market’s ups and downs. The latter, in turn, is more attuned to its own internal factors, mainly by how developers choose to hold back or release units during the property market’s flow and ebb.

Although news about Singapore’s economy may not be all that positive at the moment, the effect of that on the property market may be weaker than expected. Thus Singapore’s property market, despite slightly lowered prices and sales volume, may not be in such a bad place after all. The housing cycle’s rise and fall takes a longer route as compared to the overall economy and business sectors’, and is more often than not, caused by factors such a developers managing their inventories to preserve profit margin and mismatched expectations between buyers and sellers. These in turn cause a kink in the demand and supply chain, which in turn affects housing prices.

In short, it takes quite a huge change in sales volume of new and resale properties here before a significant adjustment in the property market can be seen.