Singaporean investors avoiding cooling measures with UK real estate?

Singaporean investors avoiding cooling measures with UK real estate?

How long will Singaporean investors wait before they head to the UK real estate market?

Summary:

  • Property prices in Singapore have fallen for the past seven quarters
  • Investors want to ease back cooling measures such as higher stamp duty and the TDSR that have led to the decline
  • As the long-term future is unclear, many Singaporean investors have already diversified into the UK property market

Property prices in Singapore have now been falling for seven straight quarters following the introduction of cooling measures.

Figures published last week confirmed a 0.9% fall in the second quarter of 2015 and again the debate was raised as to whether the measures – particularly the additional stamp duty – have now served their purpose and should be removed to help the market grow once more.

Experts and investors who want the rules to return to normal explain that fewer people are now buying second homes purely for investment purposes, with a large proportion of new launch buyers purchasing for own use. Flipping activity has also declined rapidly.

They camp are also worried about supply flooding the market, with 22,000 units set to be completed this year, before a further 21,000 are finalised in 2016.

Conversely, those wanting the cooling measures to continue argue house prices have become more affordable, down 6.7% since the third quarter of 2013, which was when the total debt servicing ratio (TDSR) took effect. They believe the decline is controlled and sustainable and if it continues, many more people will get on to the housing market.

As the debate over the long-term direction of the property market continues, some investors have already moved elsewhere. Those looking to stay in local markets have switched from residential to commercial, welcomed by less strict development guidelines. However, it remains a niche market in Singapore and only open to those with substantial funds.

More investors are diversifying from the domestic market entirely with overseas real estate. Figures show that $5 billion has been invested internationally by Singaporeans in the past two years, with the UK property market a firm favourite.

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