Mar 04

Short Analysis of Singapore Real Estate For 2013

Private property prices in Singapore have been rising constantly in the past 3 years after the financial crisis in 2008. In 2012 alone, it is estimated that the real estate market has risen by as much as 20%. This is both good times for the property investors as well as worrying for the home buyers. Noticing this phenomenon, the local government has been taking steps to cool down the market. These are introduced in the form of cooling measures and there have been seven rounds to date with the last one in January 2013.

These measures are all aimed at curbing property speculators who are flipping their assets for a quick profit or buying their second or third homes. They are mainly the cause of the rising prices and keeping first time home buyers out of the market. Another group of people being target by the government is the foreign investors. These are usually cash rich individuals from countries such as China and India who feel that Singapore is a safe place to park their money. They have also brought their wealth into Singapore and keeping the real estate market booming.

These restrictions require the buyers to pay additional taxes called stamp duties for the homes they are buying. If the home is their second or third one, they have to pay more taxes. However, most people are skeptical of these rulings simply because the rich people can afford these additional taxes if they really want to put their money in a safe place. Last year, the government received more than 2 billion in additional stamp duties from such individuals. This goes to show that their demand is rather inelastic.

To see how effective is the new measures, there will be a series of new condo at Mount Vernon that will be launched in the first quarter of this year. This is the first test of the property market in Singapore to see if the buyers are really affected by the restrictions or adopting a wait and see attitude. Until then, no one can predict the market going forward.

Despite the restrictions, first time home buyers are relatively unaffected and will the target segment for developers in 2013. We will expect the usual marketing gimmicks that will be introduced to lure these buyers. These include discounts, designer home fittings and furniture vouchers. Though investors may be kept at the sidelines, genuine home buyers are still able to buy into the market.