Cooling measures a “retardant” to property market’s recovery

Keshia Faculin4 Jan 2018

Private home prices resize

With the property market expected to finally make its long-awaited recovery, some analysts see the government’s cooling measures as a “retardant” to the market’s momentum of recovery.

Ong Teck Hui, national director of research and consultancy at JLL, likened the measures to “an iron ball shackled to the foot of the prisoner that will prevent him from running too fast”, reported The Straits Times.

Notably, a series of cooling measures saw private home prices drop 11.6 percent over 15 quarters after Q3 2013.

The decline was broken in Q3 2017 when prices climbed 0.7 percent, while URA flash estimates for the fourth quarter showed a similar increase.

Overall, prices rose one percent in 2017, in contrast to the 3.1 percent fall posted in 2016.

Market watchers expect prices to continue to move up this year, with some forecasting an increase of three percent while others are more optimistic with a 15 percent hike forecast.

But with the cooling measures unlikely to be relaxed, prices are unlikely to spike the way it did between mid-2009 and mid-2010 when prices surged 38.2 percent, said Ong.

In fact, the recovery may falter once the government decides to intervene to rein in prices or if there are economic or external shocks.

Market watchers, however, believe this is unlikely to happen in 2018.

Savills Singapore senior director Alan Cheong said the length of private property price uptrends in Singapore historically averages 17.6 quarters.

“If this forms the base case for this new cycle, we still have a few years to go before the price upswing is exhausted,” he said.

“If we see a price increase of about five percent, the upcycle will have some legs past 2020. But if prices spike 17 percent a year, the upcycle will probably taper off by 2019.”


This article was edited by Keshia Faculin.


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