Singapore property cooling measures set to remain long-term

Singapore property cooling measures set to remain long-term

The country’s finance minister reaffirms the importance of government cooling measures, as investors begin losing patience with the market’s continued slide.

Summary:

  • The need for “stability and sustainability” means that yield-suffocating government cooling measures in Singapore’s property market look set to remain in place for the foreseeable future
  • Real estate in the country is currently experiencing its worst downturn for 13 years
  • Investors are now looking to high-performing overseas markets such as the UK in search of the strongest returns

Investors in Singapore’s real estate market have been watching their yields shrink in recent years – and there appears to be no end in sight for them.

Singapore’s finance minister, Heng Swee Keat, has moved to reaffirm the importance of the government cooling measures that have been contributing to the slide in performance.

Speaking to industry figures at the Real Estate Developers’ Association of Singapore (Redas) anniversary dinner this week, Mr Heng underlined the need for “stability and sustainability” to prevent values in Asia’s second-most expensive property market from spiralling towards a bubble.

“The industry, homeowners and the government have a shared interest in ensuring a stable and sustainable property market,” said Mr Heng. “Indeed, the US subprime debacle and the ensuing Global Financial Crisis in 2007-08 have reminded us starkly of the perils of credit and property bubbles, and the risks of asset markets becoming de-coupled from the economy’s underlying fundamentals.

“The consequences have been severe in the US, as a housing market collapse quickly cascaded to the financial system and led to a recession, not just in the US, but in the rest of the global economy.”

For investors in the region, the cooling measures have stifled the real estate market. Returns have been sliding for eight consecutive quarters, the market’s worst downturn for 13 years. Crucially, however, it’s the slow pace of the sustained decline which is perhaps most concerning for investors. The three months to October saw a fall of 1.3%, and Mr Heng’s comments would suggest that things are unlikely to improve in the next three months, either.

It’s already triggered many investors traditionally drawn to Singapore to look elsewhere. International property markets in countries such as the UK have proved extremely popular in the last 12 months, with investors able to achieve sustained return growth in an established, proven market.

Find out why international demand for UK property investments has never been higher in our latest ebook:
"Investing in UK Real Estate"

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