Singapore’s private residential market has reached another peak. Although the price is too high, too much supply and so many cooling measures, the prices don’t come down because these reasons:
The Cost of Construction is getting higher
Developping a private property needs land, raw materials (sand, concrete etc) and labour. All of them today are much more expensive than before. There are also other costs like marketing cost, legal cost, financing cost. The new launches prices therefore will be higher.
No Panic Sale
the government has extended seller stamp duty from 3 years to 4 years. The seller stamp duty will be imposed on sellers as long as they sell within 4 years irregardless of whether a profit is made or not.
The cooling measures are not meant to crash the market
The cooling measures are to ensure that the property prices rise at a sustainable level and to make sure you can afford a property. If prices start to correct downwards, the government can remove the cooling measure as swiftly and quickly as they have implemented them.
We are flooded with “Cheap Money”
There is a lot of liquidity in the market. This also means that developers have more money to new property launch and consumers are paying much lesser interest to finance their property. Low interest rates are still going to be the norm until 2015 at the very least.
Strong Rental Demand
Singapore is one of the few places where there is actually real rental demand. The vacancy rate is very low and it is easy to find tenants. The strong rental demand is able to help them sustain their mortgages or even give them positive cash flow every single month.
Population to hit 6.9 Million by 2030
With the population set at 6.9 Million in White Paper released on 29 Jan 2013, there is a need to build more to cater to the increasing demand of new homes and rental homes.
Developers have holding power and are playing monopoly
Developers don’t sell their properties hence they will not slash their prices because they still have shareholders and clients that bought from them before that they need to account for. Developers are given 5 years to sell out all. In most cases, developers actually increase their prices instead of dropping prices when a certain percentage of their units are sold. They can also adopt strategies by launching their units at different phase.
The Cost of Construction is getting higher
Developping a private property needs land, raw materials (sand, concrete etc) and labour. All of them today are much more expensive than before. There are also other costs like marketing cost, legal cost, financing cost. The new launches prices therefore will be higher.
No Panic Sale
the government has extended seller stamp duty from 3 years to 4 years. The seller stamp duty will be imposed on sellers as long as they sell within 4 years irregardless of whether a profit is made or not.
The cooling measures are not meant to crash the market
The cooling measures are to ensure that the property prices rise at a sustainable level and to make sure you can afford a property. If prices start to correct downwards, the government can remove the cooling measure as swiftly and quickly as they have implemented them.
We are flooded with “Cheap Money”
There is a lot of liquidity in the market. This also means that developers have more money to new property launch and consumers are paying much lesser interest to finance their property. Low interest rates are still going to be the norm until 2015 at the very least.
Strong Rental Demand
Singapore is one of the few places where there is actually real rental demand. The vacancy rate is very low and it is easy to find tenants. The strong rental demand is able to help them sustain their mortgages or even give them positive cash flow every single month.
Population to hit 6.9 Million by 2030
With the population set at 6.9 Million in White Paper released on 29 Jan 2013, there is a need to build more to cater to the increasing demand of new homes and rental homes.
Developers have holding power and are playing monopoly
Developers don’t sell their properties hence they will not slash their prices because they still have shareholders and clients that bought from them before that they need to account for. Developers are given 5 years to sell out all. In most cases, developers actually increase their prices instead of dropping prices when a certain percentage of their units are sold. They can also adopt strategies by launching their units at different phase.