Measures put in place by the Singapore government over the last few years have been implemented to cool the property market. Fortunately, this cooling effect has been a positive one with investors, leading to a Q2 2015 take up rate of around 61%.
Factors such as declining property prices, increases in vacant properties and a declining rental index are all to blame for the cool state the property market is currently in. The biggest decision investors are contemplating is whether they should start buying up properties or hold off a little longer.
Looking at recent property launches, such as that of HighPark at SengKang, it is difficult to fathom the market is experiencing any letdown. At the sales gallery, investors were quick to write checks so they could scoop up the $500,000 studio apartments they considered to be bargain priced. With this in mind, should investors take advantage of these cooling measures in the property market before the government implements changes?
According to analysts, prices are expected to continue to fall over the next couple of years with reductions as much as 30%. With this forecast, the property market in Singapore appears to have a bleak prognosis in the coming years.
Unfortunately, this gloomy forecast will likely affect the S-reits which are trusts that invest in income-generating properties and then pay out earnings as dividends, making them a popular investment choice among those who seek yield-hunting investment opportunities.
Regrettably, the property market's decline will likely affect the value of S-reits as well. Financial analysts agree those who hold stakes in S-reits should get out while they still can. It is predicted those who invest in these trusts could end up with zero returns through this year and even to the end of 2016. Some investors may even suffer from capital losses.
Many investors who are seeking to invest in properties are now considering purchasing overseas properties in countries that have devalued currencies that fall below the Singapore dollar. While this is not a new investment strategy, it is quickly growing in popularity with overseas property purchases rising from $1.9 billion to $30 billion. Though some investors have grown wary of investing in overseas property, the market is perfectly ripe in areas such as Australia, Malaysia, and the United Kingdom. Investors simply need to do their homework and invest wisely.
Written by Istvan Loh