Singapore’s central bank recently issued a warning about the dull situation of the real estate market as well as the decline of the labor market. The price of real estate previously dropped sharply after the government implemented property controls since July last year, but recently began to rise again.
The recently released evaluation of financial stability by the Central Bank of Singapore (MAS) shows that the number of real estate inventory from new projects has doubled, reaching 4,377 units in the quarter 3 past. MAS said that the oversupply situation will become more serious in the medium term when the re-investment projects are launched while the old transactions in the past 2 years have come to a dead end. The MAS report also pointed out that an increase in inventories could lead to a drop in selling prices in the medium term if demand for houses does not increase in the near future.
After a drop in government tightening control of new real estate in July last year, the price of real estate recently increased again, reaching an increase of 1.3% in the previous quarter.
According to information provided by Singapore’s Urban Redevelopment Agency, the number of unfinished private real estate projects increased from 50,674 units in the previous quarter to 50,964 units by the end of this quarter.
MAS also warns individuals who participate in the market to be more cautious due to the instability of the economy as well as the decline of the labor market that may impact household income and reduce the demand of real estate shopping.
Specifically, MAS pointed out: “The instability in the economic outlook and the declining labor market may have a negative impact on the income and demand for real estate of households. In the context of a slow GDP growth rate, the expected increase in salary increase may reduce the ability of households to pay debts”.
According to Tricia Song, in 2020, housing prices will continue to increase between 2% and 3%, in parallel with GDP growth. However, if the downtrend occurs, it will inevitably lead to a decline in demand in the medium term and put downward pressure on real estate developers.