Buy now or wait until later?
This is probably the question in most Singaporean home buyers’ minds since the housing market got hit by the recent cooling measures implemented by the government in light of the euphoric market behavior experienced in previous months. Property launches were jam packed as potential buyers flocked to showrooms and waited in long queues just to have a chance at buying a unit.
Now, weeks have gone and analysts have weighed in on the property curbs, and how it has affected purchasing behavior.
And the verdict is in: Singaporean home buyers are unperturbed.
The Tre Ver Condominium preview was packed with potential unit buyers. So was Daintree Residence’s.
Though some analysts warn that the throng of onlookers flocking to these previews is not indicative of real property demand. It might be manufactured by real estate developers themselves. However, these showrooms may be comprised of potential buyers who would consider future property purchases.
Existing and potential local home buyers still have a positive outlook due mainly to several factors that caused them to capitalize on investing in real estate property. This is despite cooling measures of an additional 5% in the Additional Buyer’s Stamp Duty (ABSD) rates for citizens and permanent residents who will be purchasing subsequent homes, and a 5% tightening for loan-to-value (LTV) limits imposed all housing loans.
Now, let’s keep plowing ahead!
Unsold Private Homes
About 50,000 private homes are projected to be unsold in the coming years . This surplus in property units could drive down prices, the price difference of which could ward off the increase brought about by the property curbs to begin with.
This year alone, about 9,000 houses are projected to be sold. And with the deluge of potential buyers at different property showings, there is a high probability that these properties could be snatched up.
It also doesn’t hurt that real estate developers are now offering discounts left and right to lure in buyers who are still on the fence.
This kind of practice is monitored using the Review phase of the REI Method. Because the Review phase considers the situation, timing and numbers in a given real estate opportunity or scenario, buyers or sellers can make better, more informed decisions.
Just because discounts are being offered by developers doesn’t mean that you, as a home buyer, should grab the opportunity right away. You must also review your current situation, the timing of your decision, and the availability of funds which should be backed by numbers.
With the projected number of unsold houses in the next three to five years, property shoppers could expect various schemes and offerings to showcase their line of available property. Home buyers can definitely capitalize on these opportunities, given that they have thoroughly used the Review phase of the REI Method to achieve the Science of Real Estate.
Resilient Home Prices
On the other end of the spectrum are analysts stating that there is a high likelihood that property prices in Singapore will not rise as much as neighboring developing countries.
Over the years, Singapore’s housing market has proven to be very resilient amidst property price hikes experienced not just in Asia but globally. So if you’re mulling over deciding to buy a house in Singapore, it seems that the present or the near future will always be a good time to do so.
With the Evaluation phase of the REI Method, buyers are trained to review past preferences, present circumstances, and future considerations. The current real estate market will prove to be part of the continuous real estate cycle. So which arch or what part of the cycle the buyer or the market is on now will greatly impact the decision to buy or sell property.
So although there is an expected surplus of unsold property, Singapore’s property market’s historical records show that it can mitigate pricing fluctuations. This is evidenced by the several rounds of cooling measures imposed in the last seven to eight years, with demand for property still increasing with the changing of time.
Singapore Standing Mightily
One undeniable factor that drives the real estate market is Singapore itself and its strength as a nation. Singapore is one of – if not the most – steady growing economy, having stood several financial tests and blows.
During last year’s Ecosperity Conference, Deputy Prime Minister Teo Chee Hean spoke of Singapore’s initiatives to attain sustainable development, citing a sustainable economy as one of the four pillars to attain it.
Also, Singapore enjoys one of the healthiest employment markets; so healthy in fact that thousands of foreigners travel to Singapore in the hopes of finding better career opportunities and financial stability.
Another strong feature of the Singaporean government’s scheme for home buyers is the total debt servicing ratio or TDSR which was introduced by the Monetary Authority of Singapore (MAS) in 2013. The TDSR framework was instituted to advocate and ensure responsible lending and borrowing and observing financial cautiousness. It now stands at 22% and provides a healthy security blanket for the home loan industry.
The steady reliability of Singapore’s economic and financial market helps pave the way for predictable gain, an element greatly monitored and applied within the Identify phase of the REI Method. Predictable gain can be achieved by comparing the historical performance of Singapore’s real estate market or the past five to seven years. This helps buyers and sellers identify the relationship of the price of their property in comparison with rates of previous years.
In the End, Singaporeans are the Winners!
The latest round of cooling measures are deemed to benefit Singaporeans in the long run.
All the pent-up demand for property units has caused prices to skyrocket, but recent government initiatives have helped mitigate them.
There are reasons to consider both for buying and not buying for now.
At the end of the day, buyers are still mindful if prices are reasonable given the current situation, measures and challenges. And because the REI Method enables home buyers and sellers to apply to science of real estate, they can take advantage of these latest property cooling measures even if the situation may seem dreary and worrisome for most ordinary home prospectors.
With such major, life-altering decisions, it’s always best to be continuously updated with what’s happening in the industry.
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