5 THINGS SINGAPOREANS DON'T UNDERSTAND ABOUT THE 2022 PROPERTY MARKET
We are approaching the end of 2022 with the last quarter upon us.
The market in the last quarter is nothing amazing, especially in 2022 compared to the last 3 to 4 years, that it could even be considered boring. School holidays and chinese new year creating a tight schedule for everyone going overseas for trips.
Thus, during this period, property transactions and activity in the market will be low.
Mindset of ever-increasing property prices
Source of education and information from agent, online and so on. Customers have a mindset that property prices will keep going up based on the index.
It might be true for the entire index as new properties keep coming onto the market, but note that there are many properties whose prices don't increase. Be smart about this and judge the specific unit you are talking about, as to whether prices would continue to increase or are already at levels which might be too high for what it is.
Overall, being aware is most important when judging the quality of the unit and thus the premium it will eventually command.
We see that interest rates are increasing.
But is it a huge problem? It would become a problem when people feel the pain of interest rates raise. This would be an issue when it hits 4,5,6%.
Hence the factor of interest rates would serve to cool the market if interest rates do get high enough!
It's true that Singapore's property market is protected by the government from foreigners, but it has to be noted that external shifts do affect the market. Foreigners do not get to enjoy the relative affordability for property that Singaporeans get. We do however see that converted citizens are a boon to Singapore, thus they are welcome by the Singapore government.
Doing well during the Covid period and managing the situation well allows for the market and Singapore economy to be propped up. Thus, some of these external factors combined with Singapore's stability through Covid have helped to keep the Singapore property market up.
For how long? We won't know for sure.
Buy new launch to earn money?
There is a common notion that you just need to buy a new launch and you will 'confirm' earn money.
If you know of people that have bought a new launch in 2018, 2019 and earning money today, that is great. However, this past period of growth over the past four years is unlikely to be repeated. Those who go into the market expecting the same thing to repeat itself are in for a nasty surprise.
Be aware and get over what has happened over the past 4 years and look realistically at what is more likely to occur next.
2022 is boring
There were external factors that affect the property market, but these will slow down. Thus, Aaron sticks to his predictions in June that we will see a drop in prices. There will unlikely be a crash or a bubble bursting with any fire-sales happening.
The likely result for the Singapore property market is to go through a period of stagnation or a slight drop overall. Of course, if your property was at high prices or considered a 'bad' unit, then you will see prices falling significantly once the market moves, if not now already.
2023 will be the year of truth.
Many things will change, with effects of many current happenings showing in 2023, hitting everyone hard. The market is easy to judge and not exactly uncertain. We just need to face the real effects that will happen, and be as rational as we can.
Aaron shares what he has learnt from the market in 2022 and gives you 5 nuggets of knowledge about the property market in Singapore!