House prices in Singapore slated to fall 20 per cent by 2016

Published:  10 Sep at 6 PM
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A recently-published research report by Bank of America Merrill Lynch (BAML) suggests that the price of a home in Singapore is likely to fall by 20 per cent over the next two years.

The bank believes that property loan curbs and economic restructuring will continue to drive down house prices until at least 2016, and overkill on population policies will encourage the dominance of the country’s ageing population over an influx of younger expat workers. At the same time, holding back on relaxing property measures may cause a negative impact due to rising mortgage rates.

Singapore’s long-term attempts at economic restructuring are aimed at slowing the high numbers of expat workers flooding into the small country. Incentives which encourage firms to raise productivity are being rolled out in conjunction with the expected reduction in the use of foreign labour.

However, according to BAML economist Chua Hak Bin, harsher controls on expat workers and immigration as a whole may well be lowering growth and affecting the property market. At present, he added, previous growth in the number of permanent residents is now in negative territory, as is the number of foreign staff presently employed.

Experts from Singapore’s real estate sector note that vacancy rates are now at seven per cent, a figure which represents over 21,000 private homes. A further 29,000 new units now under construction are expected to come onto the market between now and 2016, amid growing concerns about their viability during a property slump.

Dr Chua considers that Singapore’s determination to become a productivity-dominated growth model is still in its early stages, and may be derailed should the government not tweak its immigration, foreign labour and restructuring measures. A pause, he says, would be in order at the present time.
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