- Aaron Lin Property
DOES COOLING MEASURE WORKS? WHEN WILL PRICE DROP? SHOULD I WAIT?
Would the cooling measures work? What would happen to the property market?
What should one do in such a market?
All these questions form the basis of our discussion today regarding the cooling measures and how they will affect the property market!
People living in the 'covid' period mindset. People have forgotten about the pre-covid norms in the property market.
A correction is being seen gradually in the market after the Covid situation has adjusted back to normality.
Property market in the recent years
With effects from Covid and an increase in situations where people are staying home, wanting more space, property prices increased significantly in a property boom!
However, there is a risk of overestimating the situation and assuming that prices will always be going up. One has to look to the past to remember that there were the 2008, 2013 falls in the property market as proof that the market does not always go up. Be wary of the recency effect where recent events are more clearly remembered and assumed to be the norms. It's best to take a long term view of the property market and be realistic about what is likely to happen.
Do cooling measures work?
The first practical answer is that, if the cooling measures do not work to cool property prices, we just need to brace ourselves for more measures, be it in the next 3, 6 or 8 months.
The cooling measures in December were relatively mild, and thus we saw the cooling measures in September after 9 months.
There are terms always bandied around about 'buyer's market' or 'seller's market'. Aaron has shared many times on record he does not feel there is such differentiation.
If you are looking for a house, the first question is: "Will the price drop?".
The adage that 'price goes up quickly, but falls slowly' is still true. It's impractical to expect prices to fall 10-20% immediately unless the property is not ideal or that the previous price was unrealistically high in the first place.
Therefore, a 2%, 3% or even 5% drop is likely to be expected. The question is when or how? However, there could still be surprises on the way.
For example, prediction of rentals falling did not materialise, with the influx of foreigners and Singapore's posture of attracting foreign talent alongside returning Singaporeans which forms the demand for housing and property propping the rental market up.
All in all, prices will drop. However, the drop will be slow and the extent will likely be more in the range of 2-5% rather than 10-20%.
"Should I buy now?"
Should you buy property now then if the prices are dropping?
The question should be more about how much you need the house!
The considerations about price would be whether you are happy about going to market with the 2-5% potential drop in prices. There is strong demand as seen in the rental prices in the market, thus this will be sustained as prices go down slightly.
If you predict that prices can go down 10-20% further down the road, that's your prerogative, but be reminded that they can also go up another 10% depending on what happens in the next few years.
Overall, prices are likely to be impacted with the cooling measures already affecting many people in the market, and we are seeing the rental prices driving more people into the purchasing market too!
Watch as Aaron dissects the property market with his honest to goodness input regarding the cooling measures and how they will work!