In a survey conducted at property blog www.propwise.sg, 66 per cent of the 269 respondents believe that the latest round of cooling measures by the Government is sufficiently harsh to prevent a property market bubble in Singapore, while the other 34 per cent do not think so.
Some 41 per cent of the respondents believe that property prices will go down this year as a result of the measures, a sharp contrast to the majority of analysts who had forecast continued property price appreciation for this year prior to the latest measures.
Many believe that the measures will severely restrict the buying pool to mainly new homebuyers, making it difficult for investors and even genuine upgraders from buying. The high amount of cash required to buy the second property would present a significant stumbling block for the average Singaporean.
A significant 30 per cent feel that the market will stay flat, hovering within plus/minus 5 per cent of current price levels.
The remaining 29 per cent feel that prices will continue to appreciate this year, citing low interest rates, the strong economy and the low unemployment levels as reasons for the continued strength of the market.
Some 31 per cent of respondents say they will put off further property investments for the time being, suggesting that the near term pool of buyers would shrink. As holding costs remain attractively low, only 7 per cent of respondents are looking to sell their property as they believe prices may drop further. With buyers holding back and sellers not under pressure to sell, transaction volumes will likely plummet.
Investors will be forced to think hard about keeping their property for the long term as they cannot expect to divest for a profit before TOP as they have done in the past – their focus will have to shift from capital appreciation to include rental yield. Also, with the higher downpayment required for second or further mortgages, the return on capital will decline, making property a less attractive investment for some.
Interestingly, long-term investors have not been deterred by the measures – 55 per cent of the respondents are keen on making a property investment if prices fall. Some respondents thought a fall in prices of 10 to 15 per cent would be sufficient to lure them back into the market.
Source : Today – 21 Jan 2011