Despite small amendments to property measures, rating agency Fitch still forecasts that values will drop amid rising interest rates and oversupply.
- Property prices in Singapore are “likely” to fall as much as 5% over the next two years
- Small reforms to government-imposed property measures are unlikely to improve performance in the short and mid-term
- Slower economic growth, rising interest rates and increased void periods due to oversupply will all continue to stifle price growth
Real estate investors in Singapore shouldn’t expect new amendments to property measures to greatly improve market performance.
That’s the message from global rating agency Fitch, after declaring that prices are “still likely to fall by another 2-5% over the next two years”.
Early in March 2017, the Singapore government announced two reforms to the property measures that have caused the market to endure its longest period of decline since 1975. But while changes have been made to stamp duty levies for people selling their property, for example, there has been no amendment to Additional Buyers Stamp Duty (ABSD) or regulations around obtaining home loans.
Fitch, however, also believes that several macro-economic factors will continue to dampen performance, too. A weaker labour market and “subdued economic conditions” will continue to affect price growth, as will the recent hike in US interest rates by the Federal Reserve which is likely to drive Singaporean rates up accordingly.
The agency also pointed out the high vacancy ratios in the city, underlining the severity of the oversupply in Singapore’s property sector.
Frustrated by the downturn, many Southeast Asian investors have bought assets in international property markets that boast higher levels of returns. In the UK, for example, current price growth levels are likely to send the average UK property value to a new all-time high.