In the recent past, there has been talk of the poor state of Singapore’s property market. Some sources reported that there was an increase in the number of units put up for sale due to the inability of the owners to service their property loans. Other sources reported that condominiums were selling for under 1 million dollars. Curiously, condominiums selling for under $1 million have always been around. The question is why those sources chose to focus on those units as if it is something out of the ordinary.
Articles that seem to promote the idea that the Singapore property trend 2016 is downwards are very appealing to those waiting for the market to crash. However, close inspection of the material presented in those articles reveals that nothing is particularly special about it. If you look at the differences in prices between current prices and past prices reveals only a marginal drop.
The Reality Property Market That Is Slowing Down
Before you start celebrating that all the negative sentiments about the property market are false, think again. It simply is not true.
The truth is that the Singapore real estate market has actually slowed down. You can even refer to it currently as a ‘dead’ market. Developers are avoiding launching any new projects since they have not been able to dispose all units in the existing projects.
DEVELOPER sentiment remains weak, according to the latest NUS-Redas Real Estate Sentiment Index, with the composite sentiment index remaining below 5. – See more at: Asiaone
Potential property buyers with the necessary funding are also not rushing to pay the asking price developers are requesting. Most of them are actually waiting to see what will go on hoping that prices will slowly but surely continue creeping down.
Nobody Loves Selling At A Loss
If you are looking for an amazing deal in the property market you need to understand the psychology of investing. The truth is that people hate to make losses. This concept applies to property investment. The pain of losing $100,000 on a property far outweighs the joy of earning $100,000 on the same property. A person that bought a unit for $ 1 million will not simply sell a property for $900,000 just because the property market is slowing down. He or she will probably hold on until break even with the purchase price just to feel better about it.
When Will Real Losses Occur?
Real losses, where the greatest opportunity lies usually occur when really bad things start happening. The 2008 Global Financial Crisis, the 2003 SARS outbreak, The September 11, 2001 attacks, and the 1997 Asian Financial Crisis are all past major economic events that led to slumping of property prices. These major events led to closure of businesses and their impact is still felt in 2016 by affected families. A naïve approach would be to assume that the anticipated slump in property prices is an amazing investment opportunity but it is not.
What Is Causing The Current Downward Singapore Property Trend 2016?
Many of the reasons behind the current slump are ‘man-made’ factors. Property loan restrictions, stamp duty for both sellers and buyers, and the rising interest rate are equally important and can influence the local property market.
What Happens Next?
Developers still holding to unsold units and are in a healthy financial state should consider holding on and wait for the recovery of the market. Alternatively, they can lobby the government to get rid of the cooling measures.
Based on a comprehensive evaluation of the current situation, it is quite clear that the property market is not about to collapse. The Singapore property trend 2016 is downwards. However, for a drastic drop to take place, property developers must be in a really unhealthy financial state that they are compelled to sell units at rock bottom prices to survive. If you are an investor, these dips in prices are excellent entry points into the property market as it rises again in the coming years.
Listen to what Head of Research of Savills Singapore, Alan Cheong have to say about the Property Trend in Singapore for 2016