Singapore Budget 2014: Impact on Real Estate

sgbudget2014Image Source: Web Photo

Singapore Budget 2014

Our Pioneer Generation and those who are needy will be taken care of.

That seems to sum up this year’s Budget in a somewhat unflamboyant manner many Singaporeans might not have been expecting. 2014 will Not be a year of generous handouts for the masses, and the rules set in place to curb the property bubble will not loosen up to rock this ship that is already charting its course ahead steadily.

In fact, Finance Minister Tharman Shanmugaratnam stated quite early in his Budget statement in parliament that “Given the run-up in prices in the last four years, it is too early to start relaxing our measures. The Government will continue to monitor the property market and adjust our measures when necessary.”

Growth Projection 2014

Singapore’s economy grew a modest 4.1% in 2013, and the Ministry of Trade and Information (MTI) maintains a growth forecast of 2% – 4% in the year ahead (Click Here for full info). What we can derive here is probably an expectation of the world economy to continue a slow recovery and our own local economy to be somewhat similar to 2013.

Toa Payoh townMy Real Estate Forecast in 2014

Resale Market – HDB: The ‘trendy’ word for Resale HDB flats is no longer Cash-Over-Valuation (COV) but Cash-Under-Valuation (CUV). Citing an article from popular online property portal, “28.5 percent of HDB resale deals during January 2014 were closed below valuation.” Article Here.

I believe this trend is likely to carry on in the year ahead, aided by the new regulation meted out by HDB on 27 August 2013 (Read Here) that New Permanent Residents need to wait 3 years before they are able to purchase Resale flats. Evidently, this ruling coupled with the increased BTO supply has already caused a dip in the prices of Resale flats, basic Demand & Supply forces at work here.

Resale Market – Private: Prices should continue to moderate in 2014, as more units launched over the past 2 years are near their completion. Data from URA shows that “for 2013 as a whole, prices in CCR and RCR decreased by 1.9% and 0.1% respectively, while prices in OCR increased by 6.5%. There was no growth in the prices of private landed properties.”

I believe both investors and home-buyers will be more cautious in 2014 and more selective in their purchases, hence a downward price moderation of 2% – 4% would be something to look out for in this segment.

New BTO flats: HDB has very much taken care of this aspect, prices for new flats are generally affordable for new couples as more BTO launches continue to roll out.

New Launches – Private: There will be fewer Private home launches in 2014 compared to the previous 2 years. Developers are wary of market sentiments and are expected to launch at attractive prices in order to sell. The 60-Years leasehold launch of The Hillford at Jalan Jurong Kechil recently is also perhaps a testing ground for more of such projects in time to come. Prices at The Hillford were generally much lower than other new launches due to the Tenure.

Leasing Market: As the number of foreigners entering Singapore remain controlled, homeowners are left to compete in the Leasing segment for limited supply of tenants out in the market.

Most major companies here have also cut back on the benefits offered to expats, hence most newcomers are seeking cheaper alternatives when it comes to rental. I foresee Private Rental prices to remain stable at popular areas and others to come down by one percentage point or two.

Trees pic

All that being said, there should not be volatile fluctuations in the Real Estate segment in 2014, save for a few tweaks. I remain very optimistic on the value of homes here as the Master Plan 2013 carries on reforming Singapore’s landscape into a more livable, more vibrant environment for the people.

Feel free to send me your thoughts on Real Estate or any Query you may have!

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Categories: Real Estate News


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