Is Singapore Housing the Next to Fall?
Bloomberg speculates that the “frenzy” in Singapore’s housing market could have painful consequences, “…if the excesses continue unabated, a collapse may occur, perhaps as early as next year.”
As you can see from this chart Singapore’s market doesn’t have anywhere near the froth of other markets world wide, so why the worry? There are reasons has to do with the nature of the market. The housing market is almost entirely supported by the state of the world economy:
Nine out of 10 local households live in their own homes, typically a Housing Development Board flat. Fewer than 22,000 Singaporean families rent private condominiums and mansions.
Rents and prices of 231,000 private dwelling units and apartments are thus almost entirely supported by expatriate families living in Singapore.
If there is a global slowdown firms will be quick to trim back and the situation will be exacerbated by the fact that demand was not driven by locals in the first place. If a slowdown occurs when the article predicts many new units will be coming to the market just as demand is declining.
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Posted: October 4th, 2006 under Asia, Real Estate, housing bubble.
Comments: 6
Comments
Comment from Sunil Joseph
Time: January 26, 2007, 8:18 pm
yes, i am a local and agree. end of the day, with an aging population and a very low birthrate, its hard to think where the local demand is going to come from.
Comment from Bram
Time: February 5, 2007, 12:02 am
I am not a local and I disagree.
First of all, the singaporean real estate market is still relatively cheap compared to the other big financial centers like HongKong and Tokyo.
Second, after 8 years of slump last year the housing market rose for the first time since the Asia crisis.
Thirdly the Singaporean government wants to population to grow towards 7 million in 2015 (from 5 million now). And fourth, we have seen comparable rising housing market prices in UK, Australia, US, etc etc in the last 15 years, and in the worst case scenario the housing market was stabilising, but there was never talk of a bursting ‘bubble’.
Comment from Boon
Time: March 16, 2007, 7:15 pm
I agree to a certain extent the weakness of the Singapore property market due to its reliance in the expatriate rental situation, but this is not entirely true as much of the contribution to the current bullish market is not due only to expatriate rentals, but also foreign purchases - expatriates are buying and not just renting.
As such, the property market in Singapore and the region may be propped up further in view of the falling markets in other regions as a result of shifting investment interest.
Considering the gradual homogenisation of the global economy, there is and will be a greater shift of wealth and economic activities, especially to the east. This means the Singapore and the region at large will have a longer run on the bullish side.
As this homogenisation of the global economy continues, so will it stabilise the markets worldwide. Barring any unforseen natural calamities or intentional destabilisation of the continuing trend, we can expect the fluctuation in the markets to decrease in intensity.
Singapore will remain, for sometime to come, the hub of economic activities in the region, especially the grossly untapped potential of Southeast Asia. A region which still has a greater upside potential than most regions in the world at this moment in time.
Comment from Jerry Hansin
Time: March 24, 2008, 4:44 pm
Yes I do agree. Singapore still have the great potential in the time to come especially with the government being very aggressive in trying to expand their influence and upgrading themselves.
Jerry
http://www.assetomgt.com
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