The Roof Above

Before we can talk about any interior design, we need to find the place to design. i.e, the apartment itself. Looking at the current private property market in Singapore, which was still on the rise, it would be crazy for me to jump into the red hot market only to be burnt later. Looking at the price index, the immgration trend and policies that are being dished out by the government, the mass market looks set for a correction given the all time high pricing and the fact that majority of the demand comes from HDB upgraders.

One reason for HDB upgraders to jump into the market now could be due to the high resale prices of their flat, making the upgrade to private properties possible. Hence, this group of buyers will rush to sell and rush to buy. The second group of buyers contributing to the price increase could be investors looking to make some money out of this red hot market. To cater for such demand, developers had downsized their units in developments to make it more appealing to this group of buyers (read “cheaper units”). These group of buyers fueled the Shoebox Unit craze in singapore. A shoebox unit is anything smaller than 507 Square Feet. It is not exactly a practicle place to live in as concurred by a recent talk show in Channel News Asia. The last group of buyers whom could be helping push up the market are PRs and Foreigners. PRs potentially contributed first by pushing up the prices of Resale HDB Flat. Why is this so? During the opening of the doors to the large foreign workforce to Singapore in 2007, the authorities failed to increase the supply of HDB flats. This statistics can be easily retrieved from the government’s Statistic Board website. The 2007 jump in property prices coincide with the increase in foreign population in Singapore. Well, they got to stay somewhere. By renting HDBs, the Singaporean family got to buy a private property to stay to capitalise the rental benefits of their HDBs. Likewise, by selling a HDB flat to a PR, the Singaporean family got to either buy another HDB flat or a private property. This is the hypothetical first domino effect of the large influx of PRs. The second effect is on a lesser degree where they also contributed to the local private property demand. The foreigners, on the other hand, could possibly pushed up the luxury market as evident in the ownership and rental of high end properties in the Central Region and Sentosa (which is the only location in Singapore where foreigners are eligible to buy landed properties).

The recent curb in foreign workers by the government and their policy of imposing an additional 10% buyer stamp duty could curb demand in some ways. This comes after the government viewed its report card in last year’s Singapore General Elections and the property bubble that is forming. With the mass market saturated and the huge ramp up in supply of HDB Build-to-Order (BTO) flats only available to Singaporeans, a correction is just around the corner. Just fast forward to 2 years later, given that all other conditions remain unchanged (i.e Government maintained the rate of immigration), the 2nd time buyers of these BTO flats will be required to dspose off their existing flat, resulting in a huge surge in supply on the resale market. The demand for resale market will not be able to cope with this sudden increase in supply (50,000 units will be released over the next 2 years). We will see the true effects of these policies before making the decision to buy any apartments. The correction may come in the next year or 2. We just need to be patient while enjoying our planning for our next home.

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