Singapore property prices could fall by 24% in 2016

Singapore property prices could fall by 24% in 2016

With Singapore’s stock market struggling, the country’s property market could see prices fall by 6% each quarter.

Summary:

  • With further correction expected in the market, Singapore’s property prices could fall by more than 20% by the end of the year
  • China’s sluggish stock market could impede the Singapore property market even further
  • Negative sentiment regarding the property market is encouraging investors to look at more stable economies

Singapore property prices could fall by 4-6% a quarter, signalling a further correction in the market.

Going by past correlation studies, it is highly probable that the recent decline in the domestic stock market could forecast further correction in property prices over the next few months, a report by investment management firm JLL showed. Historically, property market movements mirror stock market behaviour after one or two quarters.

Chua Yang Liang, JLL’s Head of Research, South-east Asia, said: “Downside risks in the Singapore economy from external shocks, leading to higher unemployment levels, a weaker Singapore dollar and rising domestic interest rates – similar to the Asian Financial Crisis (AFC) conditions – could lead to a sharper-than-desirable price correction in the property market.”

The outcome of Singapore’s economy relies heavily on China, where, should conditions worsen, a severe impact on the Singapore property market would be likely. The Asian Financial Crisis in 1998 demonstrated the turmoil that a stock market crash could have on the Singapore property market, leading to a sharper-than-desirable price correction.

In the short-term, the volatility in Singapore’s stock markets is set to continue, with the lack of clarity over China’s ability to manage a slowdown impeding any possible positive sentiment. With nine consecutive quarters of property prices falling, investors are looking elsewhere to find value that has long left Singapore.

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