National day message from Aaron, a discussion of the challenges in the Singapore Property Market, alongside a personal sharing on how his Lasik went!
Aaron continues to hold belief in his thoughts about the property market, and time will tell about the upcoming shifts and changes about to appear.
Initial thoughts
The first point to make is that new launch prices and resale prices do not match up, so it's important to sellers to recognise this fact and be realistic about prices. There is no link between resale and new launch results as, mainly, the people who are making the purchases are in different segments.
To understand the key features of the market and where prices are headed, we explore several themes below.
1. Supply
Second 6 months of 2022 would see major projects collecting keys, what this means is that the supply in the market would be changed. Whether prices are immediately impacted remains to be seen. It's a critical feature of the market that we have to be cognisant of this change in supply happening and continue to happen as projects continue to get completed after the effects of Covid.
2. Price movements and related factors
We see that property units asking for above 1.5mil are not really moving, as well as the same for old properties - not really moving. Of course, 'good properties' continue to rise in price and the definition of what is good has been explored in depth many times.
For the market today, be in HDB or private, we see signficant rental prices increase with the increase in interest rates. In theory, interest rates increase should lead to a decreased demand. however it's not the only factor in play affecting demand.
With an increase of rent, tenants would also have greater motivation to purchase. With more people entering Singapore, for reasons around the world, there is increased demand for people who are rich who wants to make property purchases in Singapore, acting as a support for property prices.
Noting these factors as well as the apparent increase in interest rates/rental prices, we still foresee some stabilisation coming.
3. Sellers with higher priced units in quantum, find it harder to find buyers.
As mentioned earlier, people who purchase new launches would not buy a resale unit as they are looking for different things and it's best to treat them as separate groups of buyers entirely. For units 800k+ to 1mil+, there will be a large number of viewings. However, the number of offers is a small proportion. There are many people who are interested, but there are very few serious and ready buyers.
For sellers, this is important to recognise. In the market, there are very little people who are ready with a serious offer to close the deal.
4. Challenges in the world ahead.
First point is that rental prices will not go down in the foreseeable future. Interest rates increase mean that rental prices will not go down. There will not be endless growth, but Singapore's situation might also not be a crash.
Rather than choosing between two extremes of either a huge boom or a painful crash, there is the likelihood of stagnation, combined with uncertainty which create challenges for many industries down the line.
Summary
By pointing out our observations this national day, we hope sellers & buyers will be more aware of the factors affecting the market and seek advice that can really help you in your foray in the property market in 2022/2023.
Watch as Aaron shares his thoughts on National Day with his very own property related national day message!