Singapore Private Property Outlook 2019 Part 2
Prices in a market reflect the meeting point of supply and demand. Since we are not fortune tellers, there is no way for us to definitely pinpoint the extent of price movement in Singapore’s property market. What we seek to do is to analyse factors affecting broader housing demand and supply. We did so in part 1 of our series. Hopefully, part 2 will continue to allow you to make a much more informed conclusion. With that in mind, let us continue our analysis of private property market in 2019.
Population growth is limited
First of all, let us not forget that a large part of our housing demand is contributed by new citizens.
We have about 4 million resident Singaporeans that can contribute to housing demand.
With a total of about 4 million resident Singaporeans, we should note this group as the main demand contributor. While non-residents will most likely only rent, resident Singaporeans are much more likely to purchase properties in Singapore. It is common knowledge that Singaporeans are not the best at making babies.
Low Total Fertility Rate has been prevalent for the past decade, which means unlikely growth in population from natural births.
This can be seen from our low fertility rate. This means that we cannot count on a boom in population from Singaporeans as a sudden demand factor for housing.
Immigration figures were kept low for the past decades due to concerns from locals about capacity issues.
In addition, if we look at immigration figures, the number of new citizens has remained large flat since 2010. This leads us to conclude that we cannot expect demand growth if we are looking at population or immigration growth alone.
Large supply incoming
Next, let’s look at another key determining factor for property prices: supply. Few years ago, developers were aggressively acquiring land to build private properties.
Private property pipeline supply figures provided by URA clearly shows a large glut of private properties headed our way in the coming few years.
Many of these projects are expected to be completed within the next few years, and we can see this clearly from pipeline supply figures provided by URA. This will add to an already wide variety of choices that buyers can choose from, which will apply downward pressure to prices. Of course, we also have to recognise that property is not a commodity and buyers will still pay a premium for good properties. There is still value even in a well-supplied market- we just have to look a lot harder.
Regulations can be removed to boost demand
It is not all doom and gloom for Singapore property market of course. There are certain factors that will prop up property prices as well. One of the most obvious factors that we know will prevent a crash in property prices is the numerous restrictions on property buyers. This prevents reckless speculation that destabilises property markets. More importantly, in the event of a downturn, the government can remove some, if not all, of these regulations. That will almost definitely cause a spike in demand. In our final video up next, we will discuss other bullish factors for Singapore private properties. Stay tuned! This is Isaac, keeping property real for you.
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