Here is where Singapore property prices are headed to in the long run:

Every family gathering, you always seem to hear your talentless but rich relative bragging about his numerous private properties. You are silently angry about the unfairness of the world. Yet, you are also wondering to yourself if it is already too late for you to enter the fray. After all, property prices have already risen by so much. Surely this means that what goes up must come down soon? However, it will be foolish to try to predict the market without looking at solid facts and figures. So let me share with you my perspective.

Everything is related!

Before we begin analysing the Singapore property market, the first important point to note that the economy, the stock market, and the property market are correlated to one another. Without boring you with too much details, this could be because they are all affected by the same factors such as interest rates, investors’ confidence, and political stability. However, we must be clear that correlation does not equal causation. For example, if I see a pretty girl every single time that I eat at the coffeeshop opposite my house, it does not mean that my presence causes pretty girls to appear. In the same way, the trend of the economy, the stock market and the property market was not caused by one another.

Price is a good indication of strength

The second important point to note would be that price is the market’s way of telling us whether something is valued or not, and if prices of something are trending upwards, generally speaking, people generally believe in the strength of that particular something

HDB Flats market outlook

We first take a look at the bread and butter of Singapore’s property market – HDB flats. HDB’s Resale Price Index (RPI) tracks the price movement of HDB flats over the past few decades, and there has clearly been an uptrend in prices.

HDB Resale Price Index indicating a long term uptrend in prices.

This is an indication that Singaporeans generally believe in the fundamental strength of the property market, which with an increasing population, more Singaporeans are buying property than selling through the years. However, notice that there is a slowdown in HDB flats prices recently.

HDB RPI shows that the previous slowdown lasted 15 years, and the current pause in prices has only been for less than 8 years.

This could be because of the large numbers of Built-To-Order, or BTO, flats that has been released in recent years. The previous pause in prices lasted about 15 years, and as of today at 2018, the pause in upswing of HDB prices has lasted less than 8 years. It is likely that HDB prices will stay stagnant in the near future.

Private Property market outlook

Next, we turn to the Property Price Index of private properties in Singapore, released by URA.

 Private property prices have also been on longterm uptrend, and pauses in uptrend last for less than 5 years.

Private property prices have also been on longterm uptrend, and pauses in uptrend last for less than 5 years.

Again, we see an uptrend. This time round, it is quite clear that the private property market is headed up more strongly than HDB prices. Even previous pauses in price lasted less than 5 years. This could be because private properties like condominiums can be readily bought by foreigners with no restrictions, unlike HDB flats that can only be bought by Singaporeans. In addition, it is also much easier to rent out private properties than HDB flats. This means that for an investor, private properties seem to be a more attractive option.

The trend is your friend, until it ends!

In conclusion, while we cannot predict the future, we can form a view and forecast based on current trends. The strong long term uptrend in Singapore private property prices tells us that Singapore properties are being highly valued. As such, one of the greatest investment advice that I can offer you is that the trend is your friend, until it ends. I hope you have gained some insights, and that’s it for today! This is Isaac, keeping property real for you.

Of course, it’s easier to spot long term trends. How about short term trends? Find out our outlook for Singapore private property market in 2019 here!

Considering to buy a new property? Find out how you can better prepare yourself here!

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