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Government cooling measures continue to impact on Singapore’s real estate sector, so where next for the region’s investors?
Summary:
Is the Singapore property market slump likely to end any time soon?
Private residential property prices in the country are now 8.2% lower than they were at their peak in September 2013, the latest APAC SF Chart of the Month from ratings agency Fitch shows. A sustained decline has now seen values fall for eight consecutive quarters, the market’s worst performance for 13 years.
Fitch’s report attributes the slide to the government cooling measures implemented in recent years, low immigration rates and the high supply of product in the face of moderate demand.
As the report notes, “Singapore experienced significant growth in immigration up until the global financial crisis in 2008″, which put huge pressure on housing stock, ultimately causing prices to rise. Property supply has grown in the last seven years, however “at the same time foreign resident immigration growth, while still healthy, has slowed by almost half from 4% at the end of 2013 to 2.1% in September 2015,” contributing to the slowdown in capital growth.
Yet it’s the government cooling measures that have arguably had the biggest impact on the Singapore’s market, and they look set to continue to quell performance and dampen investor sentiment in the coming years. Reforms such as the introduction of the Additional Buyer’s Stamp Duty were introduced to bring “stability and sustainability” to Singapore’s market at a time when investors watched prices soar. At an event in November, Singapore’s Finance Minister, Heng Swee Keat, reaffirmed the importance of these measures, an indication that they’re unlikely to be lifted in the short-term.
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