Experts see stable Singapore property

Rental yields are also likely to rise by between 2 and 3 per cent next year, in line with historical averages. -myp
Reico Wong

Mon, Sep 05, 2011
my paper

PROPERTY prices here look set to remain stable in the medium term, with key home-buying factors such as investment and upgrading still expected to drive demand.

This is despite the anticipated slowdown in Singapore's economic growth stemming from the debt crisis in the West.

As buyers are likely to be more cautious, home prices will not rise or fall by more than 5 per cent by the end of next year, said experts at the latest my paper Executive Series seminar held last Saturday.

Rental yields are also likely to rise by between 2 and 3 per cent next year, in line with historical averages, they added.

Held at the Singapore Press Holdings News Centre auditorium in Toa Payoh North, the seminar, Property Roadmap: Navigating the Turbulent Market, saw an impressive turnout of about 200 people.

"The Asia-Pacific region, including Singapore, remains on track for continued growth and can weather a global slowdown," said Mr Ong Kah Seng, senior manager of Cushman & Wakefield for Asia-Pacific.

He added that Singapore, like Hong Kong, is in the "high-risk range" when it comes to its vulnerability to the economic troubles in the West.

However, economic activity only has a moderate impact on the property market here. Other factors, such as government housing policies and foreign buyers, play a bigger role.

Over the next five years, home buyers will still see a 10 to 15 per cent capital appreciation on their properties. This, while not a windfall, does not constitute a pessimistic picture either, Mr Ong pointed out.

"If you are looking at the nearer term, property prices here will generally remain fairly flat in the next year, with the potential for some downward adjustment," he added.

"But there is always underlying demand stemming from individuals looking at upgrading or for investment, and opportunistic buyers may be quick to react to the lower housing prices, thereby pushing the market up again."

His advice for those interested in buying property here to keep monitoring the market closely was shared by Mr Mark Teo, another keynote speaker at the seminar.

The senior group-division director at ERA Realty Network pointed out that while external factors affecting the economy were important, what affects the Singapore property market most is government policy.

He cited how government investment to develop the Marina South area led the prices of properties there, such as The Sail, to skyrocket. When government officials went overseas, they marketed Singapore by showing off the Marina area, he noted.

"The development became a global product that commands international pricing," said Mr Teo. "Government policy in Singapore is very, very powerful, so make sure to track this especially if you are looking at properties for investment purposes."

At the seminar, Mr Teo also advised investors to consider buying more smaller units, instead of just one or two bigger units, to be able to earn a higher return on their investment.

This, he explained, was because rental yields one is able to collect tends to drop when one simply buys larger units.

"The rental yield you are able to collect tends to drop when you buy bigger units. Conversely, when you buy more smaller units, the rental yield tends to get higher," he explained.

For younger couples looking at buying properties for the first time, Mr Teo strongly recommended build-to-order (BTO) flats.

While these flats are located in far-flung areas, they are usually cheaper than resale flats, and "there is higher capital appreciation value", he said.

Another speaker was Ms Catherine Tan, a senior executive estates officer with the Housing Board, who shed light on HDB application procedures as well as on the various aid options available to different groups of home buyers.

"Buyers need to refer to transacted resale prices of comparable flats and not on cash-over- valuation in your negotiation so that they will not overpay. The transacted flat prices can be found on the HDB info-web," she added.

Those my paper spoke to said they found the three-hour session highly informative.

Mr Martin Kwan, 33, a patent lawyer who attended the seminar with his fiancee, Ms Eunice Choo, 34, said he managed to get most of the "burning questions" he had about buying property answered at the talk.

"The session made me open my mind to really consider buying a BTO instead of a resale property, despite transport being an issue and us wanting to live nearer to our parents," he said.

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