Now that the new cooling measures and the White Paper on population has had time to sink in, it’s time to figure out what the effects are, and how they will impact the property buying/selling decision.
As previously mentioned, I think that the cooling measures are meant to temper price growth, not to cause prices to drop. The reason why I say that is because there is quite a high penalty to reinvest in the market in the form of higher cash outlay and ABSD. If sellers are not able to reinvest their proceeds by buying another property, then it is quite unlikely that they will sell to begin with. If there are few sellers, then prices will not drop. At this time, the only sellers for whom the price is dropping are the developers, who have had to increase their discounts to offload their units.
As for the White Paper, I think it’s unfortunate that so many people are fixated with the 6.9 million figure. Whether it’s a soft target, high target, or even low target, it doesn’t actually matter. What really matters is whether we have the infrastructure to accommodate the number of people. The problem is that people are assuming that the situation is going to stay as it is, with frequent MRT breakdowns, traffic jams in the middle of the day, even the occasional flooding/ponding. Current infrastructure certainly seems rather stretched even with 5.3 mil people here, especially with aging (and maybe ill-maintained) MRT tracks that causes breakdowns more frequently than expected. I think that the way the White Paper was communicated was simply unfortunate. Where it could have been a constructive conversation in infrastructure building and maintenance, it became a facepalm event that focuses on something that seems important but really isn’t. The White Paper has since been revised to reflect the infrastructure slant, but the damage is done.
So, what does that mean for the property market? Let’s just say I won’t be putting down money on an investment unit at this time. Stamp duty is a little too high for my liking. However, I won’t be looking to sell either. Rental market looks to be firm going forward as well, so I think I should be pretty safe. For a buyer with no other residential property to his name looking to buy a home, I say go for it if you’re paying rent for your place now. Otherwise, there’s no hurry. The new cooling measures are looking very effective for now.
I do anticipate that with the MRT network expanding quite extensively and commercial activity decentralising over the next 17 years or so under the White Paper, home prices look to be more equitable across the island. For those still looking to buy outside of the central region, there should be quite a lot of opportunities. While Jurong is looking to be the fore-runner of this phenomenon, given that it’s the focus of the last Masterplan, other areas such as Sembawang, Loyang and Balestier-Boon Keng vicinities look set to be revitalised with better transport links and/or new commercial developments.