Those who have witnessed the vibrancy of Singapore’s real estate market from 2017 to 2018 may not know that for the previous 3yrs or so the sector was getting quieter by the day.
This followed government intervention in 2013 when property prices seemed to spiral out of control. The government revised the Additional Buyers’ Stamp Duty (ABSD), in early 2013, and in mid-year it restricted the ability of individuals to take loans.
In the latter case, the law stipulated that a person cannot borrow amounts exceeding 60% of one’s monthly income.
However, beginning 2017, a new wave emerged, with owners of old properties becoming more receptive to the idea of letting go of their cherished possessions. Marketing agencies must have played a big role here.
So, en bloc sales increased and soon ordinary Singaporeans began to join the country’s millionaire’s club.
This enticed other property owners to agree to sell collectively, and this caused a surge in market vibrancy. As a result, the FTSE Straits Times Real Estate Holding and Development Index hiked a good 26.8% in 2017.
Even though developers are still making profits, Mr. Vijay Natarajan, an analyst at RHB Research Institute, says recent market competition has ended up making developers cough hefty sums to acquire property.
His view is that property prices are going to rise even more in 2018, probably between 3% and 7%.
A rise in property prices, definitely, means developers must, of necessity, release their new units at higher prices. Nevertheless, this does not seem to be a problem right now as market signs indicate there are ready buyers for the newly developed properties as priced.
The demand for new housing units, especially the high-end properties, has made developers all the more confident, and they are likely to relentlessly pursue available en bloc properties.
Even professional analysts are satisfied with the continuing en bloc fever. Some like Credit Suisse are confident households are in a position to handle any rise in interest rates that may be caused by increased real estate activity in 2018.
Derrick Heng, an analyst at Maybank Kim Eng Securities, says the recent hike in interest rates is still manageable.