After several years' depression the Singapore residential property market took off last year. The residential property price index rose by 31.2% in 2007, after 2006’s 10.2% rise. However, prices in prime districts rose by considerably more.

2.

According to Knight Frank research 2008, the private residential sector for 2008 is envisaged to see 0% to 3% reduction in prices. The reduced forecast is supported by the graph at right. This shows the rate of price increase has slowed dramatically in the last 12 months from a high of 8.3% in Q207 to an actual contraction 2.4% in Q308.

3.

This slow down in home price increases is not unique to the Singapore residential property market. According to Knight Frank, global residential property price inflation continued to slow in the first quarter of 2008, falling to 6.1%, compared to the 9.2% recorded the previous quarter and 9.8% over the 12 months to Q1 2007. Interestingly, the top performing markets are dispersed around the world, with Bulgaria, Singapore, Hong Kong and Jersey being the locations with the highest growth rates.

4.

Foreigners are permitted to buy into the Singapore residential property market without restriction, except for property with land, whereby approval is required from the Singapore Land Authority (SLA). There are few foreign exchange restrictions, and non-residents can now borrow up to 80% of the property finance locally. In 3Q 2008 Knight Frank report, the proportion of foreign buyers islandwide continued to decline representing 21.6% fo all transactions. The Mercer 2008 Quality of Living Survey attests to the desireability of Singapore as a place for expatriates to live, which has a positive impact on the Singapore property market.

One of the strengths of the Singapore residential property market has been the high-end properties located in the prime areas. However a report by global Realtors, Cushman & Wakefield is predicting a fall in prices of apartments and condos in Singapore city’s CCR (Core Central Region). The report states that it is unlikely to see another peak period within the next four years. The forecasted fall will depend on the growth of the economy of Singapore but expected drops are estimated at 8% and 17% respectively.

6.

Historically, Singapore residential property market downturns are caused by property oversupply. According to the Urban Redevelopment Authority, at the end of Q3 2008, there was a total supply of 66,422 uncompleted units of private housing. Of these, 42,918 units were still unsold.

7.

Some considerations investors should take note of in relation to the Singapore residential property market include:

i) Investors expecting capital appreciation in the Singapore property market should note that 90% of Singaporeans already own homes and therefore are in no hurry if prices are not attractive;

ii) Even at the peak rental levels earlier in 2008, Singapore rental yields average only 4 to 5%, with long-term rental yields expected to face further downward pressure due to increased housing supply;

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In summary, Asia Property Consultants believes the residential sector price peak has passed and potential growth could be driven by the mid-end and mass-market sectors.

For more information on the Singapore residential property market, call our Singapore office at (+65) 67350120 or contact us at email@healyconsultants.com