Authorities Are Alerted on High Property Prices But Property Market is Far From Overheated

The increase in Singapore property prices is most commonly attributed to the increase in new condominium launches, or ‘en bloc sales’ as some local brokers call them. While these are certainly important contributing factors, a far more significant driver of property price increases has been the sharp downturn in commodity markets around the world. Commodity prices have tumbled in recent months and fall further still, adding further downward pressure on already negative real estate investment values across the world.

This is a double blow for the Singapore realty market, already under pressure from the global property market crunch that has had a negative impact on mortgage rates over the last few months. While the fall in prices across the globe has driven thousands of investors to the Asian nation in search of safe haven investments, the same has had a far less adverse effect on Singapore’s property prices. While the global economy is in a transition phase, the slowing of prices in the United States and the UK have had an equally adverse effect on property prices in Singapore. While investors have flocked to the country to partake in the rush to secure prime real estate investment opportunities, the influx has not dampened local activity. On the contrary, listings in Singapore have remained quite brisk over the last few months, with most properties coming from overseas investors.

The slowdown in the U.S. and the UK has resulted in a slowing of property sales across the board, but Singapore’s residential property prices have not followed suit. Despite this, there has been a sharp increase in the number of new condo launches in the country over the past two years. As a result, the competition among developers to get new customers has become steeper, leading to further price decreases for already negative prices. While this may seem to point towards a lack of supply, the opposite is actually true. With so many new condos being built every month, the supply is far greater than demand, and this balance can only mean good things for buyers.

The Monetary Authority of Singapore (MAS) stated it is being “highly alert” of the continued boost in building prices and also will intervene prior to the market gets too hot, reported TODAY.

” MAS, along with MND (Ministry of National Development) and URA (Urban Redevelopment Authority) continue to be extremely watchful to the threat of a continual boost in costs about earnings fads,” stated MAS Managing Director Ravi Menon during the media briefing of the MAS’ annual report.

He noted that while economic development is yet to totally recuperate from the impact of the COVID-19 pandemic, home prices have already raised over their pre-pandemic levels.

Specifically, nominal gdp (GDP) diminished 8.2% last year, while the house consumer price index climbed up 1.6%.

For the very first quarter of 2021, nominal GDP stays 4% listed below its pre-pandemic degrees, while the personal property price index stood 5.6% above its pre-pandemic degrees.

Menon described that a prolonged divergence between earnings as well as real estate costs is unsustainable.

On whether the residential property market gets on the “overheating stage” as well as if MAS prepares to present cooling actions to suppress further residential property cost hikes, the MAS chief shared that he does not believe the market is overheated.

” If it’s overheated, we’ve not done our task well. The approach of the Government is to prevent the market from overheating,” he noted as priced quote by TODAY.

He stated MAS will “never tell beforehand” if it will turn out cooling down steps considering that doing so would only beat the objective of the visuals.

” So stay tuned and simply watch, and we wish the marketplace will certainly continue to continue to be stable which we do not need to make any moves,” he said.

” Our objective is to make certain that the residential property market does not prosper of underlying financial fundamentals … we’ll continue to enjoy just how the market relocates from here let’s start, before we make any kind of reasonings.”