http://www.selectproperty.com/2016/0...-for-recovery/

12 Apr 2016

Singapore property market not set for recovery

Despite a small price increase in the first quarter of 2016, the Singapore property market hasn’t started a recovery.

Summary:

  • A property market recovery isn’t expected soon in Singapore, despite prices increasing for the first time in three years
  • Luxury property prices are expected to continue to drop as tax regimes effect global markets
  • Investors looking for better value and market stability are looking towards other property markets, including the UK



Singapore property prices may have increased for the first time in three years, but the market isn’t expected to recover any time soon.

In the first quarter of 2016 Singapore’s property market experienced a rise in prices, but a report argues that the rebound in prime property prices won’t be sustainable.

“While it is encouraging to see an uptick, our analysis of transaction data does not suggest a turning point as yet,” Jefferies Singapore said in a report.

Quarterly resale volume in the prime area has remained range-bound over the last eight quarters. The report noted that while the average transaction size has seen an uptick in the first quarter, this was mainly due to one-off transactions.

The launch of smaller units at the Cairnhill Nine development also directly affected the rise in primary volumes, which led to the sale of 241 units in Q1 compared to an average of 100 units in the primary market for the last five quarters.

Luxury property prices may continue to drop as tax regimes in other top markets change.

Stamp duties have been introduced in London for second homes and application fees have been introduced for foreign property buyers in Australia, similar to the Additional Buyer’s Stamp Duty legislation existing in Singapore.

These changes may eventually lead to realistic pricing, but a true recovery is a long way off for Singapore’s property market. Investors are looking towards other international markets that offer more value and market stability, including the UK.