The Singaporean property investment market: closed until further notice?

The Singaporean property investment market: closed until further notice?

After explosive growth, the Singaporean property market’s cooling off period will be slow and sustained. How long can investors wait?

Summary:

  • The Singaporean property market is undergoing its worst performance since 2000
  • After years of growth, investors cannot expect future returns for quite some time
  • More stable real estate alternatives such as the UK are offering investors the chance to avoid the worst of the cool down

The Singaporean property investment market is undergoing huge upheaval.

Experiencing its worse downturn in 15 years, investors cannot expect conditions to change anytime soon as cooling measures will continue to restrain the market.

Property prices in Singapore have dropped for the seventh quarter in a row, with Urban Redevelopment Authority data revealing no market sector escaped the fall.

Since the global financial crisis, Singapore has introduced several measures to curb the property market including tougher mortgage conditions and higher stamp duty. These started to bite last year when property prices decreased by 4%, but investors will need to wait longer yet before re-entering the market.

“There is a fair bit of latent demand just waiting in the wings,” said Executive Director of Research and Consultancy at SLP International Nicholas Mak. He explained the government is concerned about relaxing measures “too much or too fast” due to the possibility that it could lead to a sharp rebound.

The central bank said this week that it was still too early to lift the cooling measures and local experts have warned investors that by the end of the year, prices may fall by as much as 5%.

Prior to the cooling measures, Singaporean real estate had experienced huge growth, with some investors gaining as much as 60% over three years. Many are now taking their returns and looking to invest them elsewhere. More stable markets such as UK real estate are proving to be popular for short-to-medium-term investors.

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