Declining Singapore property prices boost sales but dampen investor interest

Declining Singapore property prices boost sales but dampen investor interest

A decline in Singapore property prices has seen an increase in demand from home buyers, but a loss of capital appreciation for investors. As a result, many investors are now looking to acquire overseas assets.

Summary

  • Singapore’s property demand remains very resilient, despite cooling measures implemented by the government
  • Property prices fell 3% in 2016, marking a third straight year of price decline.
  • This decline in prices has seen an increase in purchases from home owners, while investors are looking overseas to markets offering better capital appreciation

 

Supported by low interest rates and a stable economy, demand for Singapore property remains “very resilient”, according to National Development Minister Lawrence Wong,

Mr Wong commented: “Our economy is still growing, so I think demand is still healthy and our assessment is these factors will remain for some time.”

As a result of cooling measures implemented by the Singapore government, property prices fell by 3% in 2016, declining for the 13th consecutive quarter, marking the longest period of decline since data was first published in 1975.

This decline saw 2016 house sales surpass 2015’s tally, as a third straight year of price declines fuelled demand from home buyers. Amid signs the city’s housing market is stabilising Singapore’s residential property curbs look set to stay in place in 2017.

Lim Ming Yan, President and CEO of CapitaLand, commented: “We see volume picking up and the price declines have slowed. We see this trend continuing for 2017. There is no compelling reason for the government at this point to make major changes to property curbs.”

This news will be welcomed by those looking to buy a home, who will be benefit from reduced prices. For Investors however, the story is very different, as the reduction in property prices will continue to result in a loss of capital appreciation.

As a result, many investors are now looking to overseas markets for greater return on investment. Britain is proving to be a particularly popular choice, in light of the UK’s decision to leave the EU last June saw the Sterling exchange rate fall to its lowest level in 31 years, rendering UK property considerably less expensive to overseas investors.

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