Bullish property market forecast for next 2 years; speculators cautioned

Singapore property prices are likely to grow over the next two years, and property watchers say this can be sustained.

At the same time, they are urging speculators to proceed with caution, and not to rush in, unless they can afford the risks.

Many turned up to gain insights from property watchers at the Singapore Press Club talk on Wednesday.  

And the word from the expertsthe current boom is expected to continue over the next two years, due to the growth in the number of foreigners coming to work in Singapore, the opening of the Integrated Resorts in 2009 and 2010, as well as an anticipated shortfall in the supply of homes. 

Some analysts say the recovery of prices in the mass market, which is now priced under $600-800 psf, is likely this year.

They add that the en bloc fever is also likely to continue, with more units demolished than the number of units completed this year – which means a negative supply in the private residential market.

Ku Swee Yong, director of Marketing & Business Development at Savills Singapore: “Our numbers are showing that the expected 12,000 units that would be T.O.P-ing (Temporary Occupation Permit) in 2009 would be in time to ease the tightness in the residential market that is caused by the next 24 months of shortage.

“And the supply that’s coming on-stream in 2010 could then put us in a more comfortable position where, maybe, the buyers and tenants would have a wider choice. But within the next 24 months and up to 2009, it is a landlord’s market for the residential market.”

But is the current level of speculation healthy?

Tan Tiong Cheng, MD of Knight Frank Singapore: “I don’t think it has reached an unhealthy pace or rate. It’s restricted to a few developments, and quite often they are niche projects that people have confidence (in), be it locals or foreign buyers. I see more speculative activity, but by and large, I would not say it’s excessive.  

The high-end market interest comes from people who are cash rich, people who buy without going through bank resources and for foreigners where quite a lot of them are attracted to Singapore. Singapore has changed, attracting foreign talent, wealthy individuals, people with capacity to buy high-end, and that’s why prices are moving at such a rapid pace.”

While property watchers say there are already anecdotes of sub-sales in the market, no real numbers are available yet.

So they urge caution, and buy only if you can afford it.

Winston Liew, a senior investment analyst on Properties at OCBC Investment Research: “Speculation obviously comes with speculative risks. Buyers must be wary. The issue is affordability – whether they can afford to speculate and whether the buyer is buying to invest. By definition, it implies he has spare money to put aside and invest but I have to caution those people without sufficient funds who are investing and speculating in hope of making more money.

“Now, these are strategies which are highly risky and we have seen the consequences of what that can lead to in the last 10 years. I would caution speculators to be careful, particularly for ordinary Singaporeans, not to be sucked into the speculative fever that we are currently seeing taking place.”

However, Mr Liew adds that a repeat of the current increase of more than 50 percent in property prices, especially the high-end market, is unlikely 

Source: Channel NewsAsia, 07 February 2007

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