This article will give some insights on Singapore Property Outlook 2019 and certain trends that are forecasted by the experts in the market. The Singapore’s property market has not seen such an action-packed year since 2007. Majority of year 2018 will be reminisced for the collective sale activity that had reached the fever pitch with a number of developments with asking prices that are above the $2 billion mark, ugly fights among the neighbours as well as requests from the heritage minded to conserve the iconic projects such the Golden Mile Complex and the Pearl Bank Apartments.
Then in July 2018, the market filled with more drama with the intervention of the government by dropping a bombshell with a new wave of cooling measures stop the exhilaration. This series of cooling measures ultimately bring the collective sale fever to a squawking stop amidst bumping up the costs of land acquisition and higher additional buyer’s stamp duties (ABSD).
In terms of public housing market, the hefty prices paid to acquired old aged resale flats do not match the realism of the government policy. During the Rally speech for the National Day by Mr Lee Hsien Loong, Singapore’s Prime Minister, he had stated clearly that the Housing Development Board (HDB)’s flats which were sold as 99 years leasehold will not have their leases extended.
With the awakenings from all those excitements, analysts stated that the market for the year 2019 will be likely a fairly quiet year for the residential property.
Singapore Property Outlook 2019 Trend: Exculpation From the Cooling Measures?
Analysts will not be anticipated another new set of cooling measures this coming 2019 ahead.
On the divergent, they forecast a possibility of a minor relaxation on the measures, as there are increasing anxieties on the trade war between China and the United States of America as well as the soaring interest rates is diminishing the positive outlook for the nation’s economic growth.
According to the Chief Executive Officer of International Property Advisor, a firm that broker real estate, Mr Ku Swee Yong, the property market in Singapore might not be heat up by the weak global markets. He also stated that there are possibilities for the rolling back of the cooling measures with the increase in the number of bankruptcy sales and also the weak macro economy.
The Ministry of Law has presented data that as high as 3097 applicants has filed for bankruptcy in the year 2019 which is a 5.6% increase from the previous year. The number for bankruptcy orders filed also had a slight increase to 1657 by approximately 1.2%.
The senior director for consultancy and research at Savills, an international real estate firm, Mr Alan Cheong has also agreed that the government will be unlikely to introduce more property cooling measures in 2019.
In effect, Mr Cheong thinks that the government should review the ABSD enacted on foreigners that are purchasing private residential units here, which was increased to 20 per cent up by 5 per cent in July 2018.
According to Mr Cheong, foreign buyers were already turned off from the previous ABSD of 15 per cent. Private bankers are also mourning the difficulties in terms of new account openings for overseas high net worth customers as these groups will need to run through the tedious assessments of product suitability.
Home Prices Are Not Likely to Decline
After all the elation in 2018, the collective market will be likely quiet down in 2019, especially as the costs of land acquisition were also increased as a portion of the most current cooling measures.
The developers will be likely to clear their stocks in their land banks rather that piling up more land parcels as pointed out by analysts.
The head of research for Singapore and the South-East Asia for property investment company, CBRE, Mr Desmond Sim has also pointed out that with the “punitive” nature of the cooling measures in July 2018; only the smaller collective sale developments will higher possibilities to be able to find buyers.
The executive director of ZACD Group, an asset management company, Mr Nicholas Mak said that he will be monitoring closely on the performance of new private project launches as these launches will give an indicative sign of how the prices in the market will move.
With the new rulings, individuals who are taking their first housing loan will have to abide to stricter loan limitations and also the ABSD rates for all categories have been increased by 5 per cent points with the exception for first timer buyer who are Singapore Citizens and Singapore Permanent Residents.
If the responses at the new project launch are lukewarm then the sales of the primary market might deteriorate, as majority of the developers might also resist reducing their prices.
By the end of it, the resale market might be the one setting the trend in pricing as the individual sellers might not have the same holding power as the developers as stated by Mr Mak. He is expecting that there will be a pipeline between 9,000 to 12,000 new homes in 2019.
The head and senior director of research at Knight Frank, an real estate agency, Dr Lee Nai Jia also agreed that the new prices and sales are anticipated to stay relatively stable though the resale market sellers will have high possibilities to have greater pressure to the lowering in prices.
The head of consultancy and research for OrangeTee & Tie, Ms Christine Sun stated that there are possibilities that developers will space out their new development launches to prevent any head to head competition with one another.
They might also release the units intermittently that spans over months so that they can maintain their prices as she estimated that in 2019 there will be a total of 13,000 to 14,000 new apartments that will be launched though there will be between 18,000 to 19,000 new units that will be ready to launch in 2019. According to Ms Sun, the balance units will be likelihood launch in year 2020 and 2021.
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Singapore Property Outlook 2019 Trend 1: Issue to Look Out For: Short-Term Lease
Analysts caution that purchasers who invest in the properties with the hopes of leasing them out might end up in disappointment.
The population for non-residents has dropped by approximately 30,000 in the last 2 years but with there has been a “relentless” of 93,000 private units, executive condominium and HDB that were added to the stocks in the property market during the same timing as noted by Mr Ku. He also added that there is practically no chance for the market in rental to be liberalized this year for short term leasing to be legalized.
Mr Lawrence Wong, the Minister for National Development had sounded out in August that the legalization for short term Airbnb leases are not likely to come any moment soon, quoting the “mixed views” after public consultation.
Dr Lee also agreed and adding that there is not expectation for the government to make decision on its stance with the hospitality sector that is changing and becoming more productive. The hospitality sector might be impacted adversely should this stance is liberalized by the government said by Dr Lee.
But should if the government does liberalize that which is highly unlikely, this will be good for the property market noted by analysts.
Mr Cheong also noted that such a legalization positive gains might outweigh the danger of minor exploitations of law. He also noted that with the anticipation of the economy meltdown in this year with the number of retrenchments are likely to increase; this method of earning additional income for the households will be welcome.
Singapore Property Outlook 2019 Trend 2: The Minds of the People Are Still on Ageing HDB.
On the HDB flats market, the government expected to keep prompting to Singaporeans that the lease of the 99-year HDB units will not be prolonged and also that these ageing HDB flats’ prices will drop in accordance as noted by analysts.
But analysts hope that the government will, at the meantime, provide more information of the schemes that it has crafted to assist HDB owners of the ageing flats to get out more value. An examples is that the government had announced the details of the extended Lease Buyback Scheme which now is also applicable to the 5 rooms or larger units that was previously applicable only for the smaller flats that is up to 4 rooms.
This scheme, which is made to those who are 65 years old and above with a monthly gross which is below $12,000 enables the owners to selling part of the lease remaining of their residences to the HDB back with the monies that need to top up the retirement account of their Central Provident Fund (CPF) which allows them to have some cash back.
Some other measurements also include the change of rules of CPF loan that will allow purchasers of HDB resales flat to use more of their CPF monies for purchasing.
This targets to answer to those old HDB flat owners’ anxiety that will be getting more difficult to sell of their HDB flats as the years pass by.
Analysts also wish to have more information on the other 2 proposals that PM Lee had highlighted in August which is the aim of having the ageing HDB flats to retain their value i.e. the extended HIP II which is the Home Improvement Program as well as the VERS which stands for Voluntary Early Redevelopment Scheme.
The VERS program allows those living in the neighbourhoods that are 70 years out of the 99 years leasehold to let the Government to acquire their residences back for redevelopment. They will get assistance to acquire another flat to stay as well as compensations
The scheme will be launched approximately 20 years from now when the nation’s eldest HDB flats becoming 70 years old. However, the government is still working out on these and how much the compensation will be is still work in progress.
At the meantime, the HIP II program targets to provide each single HDB flats to have a 1 more go for upgrading in the span of their 99 years lease tenure once they reached the 60 to 70 years lease.
The present HIP covers only those flats that are constructed in 1986 or any earlier ones.
Singapore Property Outlook 2019 Trend 3: Important factors to keep a look out in 2019.
The changes to the CPF ruling on loan: Those purchasers of ageing HDB flats are allowed to use more of their CPF monies; this will be a policy to answer to the anxieties of those home owners that has difficulties to sell off their old HDB flats.
There is also the preview of the underground masterplan for the nation. The URA will be showcasing a more comprehensive of the underground map in 3 Dimensional as well as stating out on their possibility uses.
The increase in the interest rates: While the home purchasers are concerned about their home mortgages that is becoming difficult to service, real estate analysts said the effect of increasing interest rates will be likely to be cushioned by the government’s macro prudential measures that will introduced earlier such as the Total Debt Servicing Ratio (TDSR) as well as the increased of the loan to value limitation which will assure that home purchasers will not have more mortgage servicing than they can handle realistically.
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