Singapore Property | One of the factors that cause the property market to stall immediately after cooling measures is the application of “wait and see” strategy by most potential buyers. As far as purchasing a property is involved, many buyers are attempting to time the market, whereby they wait for the prices of properties to go down, and then make the purchase when the properties are cheap. However, the “wait and see” approach comes with some intrinsic problems.
- “Wait and see” when it comes to purchasing property is akin to believing you are a prophet by just wearing a robe
Following the enforcement of Additional Buyers Stamp Duty (ABSD) back in December 2011, too much “wait and see” was witnessed. Many prospective buyers assumed that prices would definitely drop and several analysts predicted a scenario where foreign investors would channel their investment elsewhere. On the contrary, property prices rose significantly in 2013, translating to about a 60 percent increase from 2009. A large number of those who postponed their purchases in 2011, anticipating prices to go down, paid more in the end.
After the introduction of the Total Debt Servicing Ratio (TDSR) back in June 2013, analyst projected that prices would drop, and they were right. However, they couldn’t tell exactly when the property market will slow down.
In November 2014, people started buying properties expecting prices to shoot, but they continued to drop well into 2016. This means those who purchased in 2014 spent more than those who purchased in 2015. Likewise, those who purchased in 2015 paid more compared to those who purchased in 2016. With that in mind, you can now see why “wait and see” approach is ineffective and unreliable.
- The residential property market reveals the dynamic and interventionist nature of the Singapore government
Lawrence Wong, the minister in charge of Singapore’s national development docket says, “The Government can’t and won’t take a non-interventionist approach when it comes to property cycle. Therefore, we can intervene any time we deem fit.” This means that buyers and sellers of properties in Singapore can’t entirely depend on “natural” free market forces to control the prices of properties. They should be aware that the government can and is always prepared to adjust the market direction.
- Interest rates are increasing at a fast-paced rate
We can’t predict with certainty that property prices will continue to fall, but we all know for sure that interest rates have a high likelihood of continuously growing over the years. The interest rates were at about 0.406 in 2014, but as of now, the rate is 1.76, signifying a four times increase within four years. Therefore, the longer you postpone the purchase, the higher the interest rate you will end up paying.
Looking for properties, you may find some new launches at a mega residential development, The Florence Residences in District 19 or 2 other freehold developments in the same district The Lilium or The Gazania.