Poor Outlook For Singapore Properties

At current low interest rates, buyers are not snapping up properties in Singapore. While some property prices have almost doubled over the past year, increase in salaries did not catch up, meaning Singaporeans are finding it harder to afford private and public housing.

The previous spike in property prices are mostly due to liquidity from speculators, en-bloc sales, private equity funds, jobs growth, etc. rather than real affluence and affordability. Now that credit crunch and inflation have descended, prices have fallen across the board.

The US sub-prime crisis has not bottomed out yet even if it seems to have stabilized. Bad news continue to emanate from the financial sector. Dark clouds of oversupply and default in deferred payments in 2009 will depress the property market further. Coupled with a likely increase in interest rates in the mid-term to combat inflation, the higher cost of borrowing will increase business expenditures and dampen buying sentiment.

However, mass market launches (in the region of $850-$900 psf) are still attractive given the strength in prices of HDB housing, especially DBSS flats. They are already priced in excess of $500 psf so the fundamentals for private housing in suburban areas around $800 psf is sound. If your property is in a good location, downside is limited and profit potential can still be unlocked.

As for high-end property market, avoid it like the plague for now… there are sellers trying to offload their properties at deep discounts but no takers.

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