Singapore home sales in February slumped to a considerable 48 percent lower when compared to the same month a year ago, as a result of lending curbs which have dramatically stemmed property purchases. New figures released by the Urban Redevelopment Authority [1] found that developers across Singapore sold just 382 units in February 2015, whilst they sold a considerably higher figure of 732 property units in February 2014. It is forecast that the remainder of 2015 will also see dramatically reduced numbers of property sales, as property restrictions make purchasing a home almost impossible for many. The curbs placed on property sales by the Singapore government is the main reason for this relatively sudden and dramatic drop in the number of properties being sold. [2]
The Reasons For The Slump
The government are having the finger of responsibility pointed squarely at them, as the property market in Singapore began to slump in 2009 when they began to introduce curbs and tight restrictions of residential property purchases. In 2009 a combination of low interest rates and high demand for property from foreign buyers and investors raised internal concerns that the property market was overheating. In the five years between 2009 and 2013, property prices surged by 40 percent, resulting in record property prices. This prompted the government to introduce some of the strictest measures and restrictions on lenders ever known. These measures included a cap on debt repayment costs that was set at 60 percent of the borrower’s monthly income, much higher stamp duties which are paid to the government on home purchases and also an increase in real estate taxes.[3] Whilst these caps, increased taxes and other limitations are no deterrent to the super-wealthy keen to own property in the metropolis, they will make it difficult for those on low or average incomes, or affected by other factors that may make them appear less attractive to a mortgage company or other lender. [4]
The Effect on The Property Market
These new restrictions aren’t only affecting individuals looking to get on the property market: they are also having an impact on property developers and the overall property market. Developers have made the decision to scale back on their new launches and reduce the numbers of properties that are being build, with just 357 new units launched February, down from the 415 new units launched in January, and down considerably when compared with the number of launches in previous years too. The property market in Singapore is definitely on the slowdown, as a result of the restrictions the government put in place to prevent it from burning out: Two condominiums which were built last summer were ultimately sold for less than half their original price, while other newly built properties sit empty.[5] The cooling measures introduced by the government seem to have hit the high end property market particularly badly.
But there is an upside, for those potential homebuyers who meet the government guidelines for purchasing a property and don’t have a problem securing the funds they need. [6] Especially if you’re looking to purchase a high end luxury property. For home buyers in Singapore right now, there is a wealth of choice available, and no real need to compromise: you’re sure to find the perfect property that meets all of your specific needs, and you’re likely to find it easy to negotiate the price and other perks that you want too. It really is a buyers’ market. Why not see what you can get with your money today? You’re sure to be pleasantly surprised.
Further resources
[1] “Singapore February Home Sales Drop 48 Percent on curbs”, Bloomberg, http://www.
[2] “Monthly home sales in Singapore dive 48 percent”, The Malay Mail Online, http://www.
[3] “Singapore private home sales up in February, but EC deals slide”, Channel News Asia, http://www.
[4] “Guide for securing a mortgage home loan with a disability, Mortgage Calculator, http://www.
[5] “A high end property collapse in Singapore” CNBC, http://www.
[6] “Singapore based regional property developers are facing rising threats”, The Motley Fool Singapore, http://www.fool.sg/
Guest Article from Gemma Hollis
