Export Based Economic Recovery elevates Residential Property Prices
Singapore was hit hard during the recent global recession. Its exports based economy was dependent upon the exports to China, USA and Europe. However, decreased demand from these countries led to economic melt down in Singapore, which as witnessed across all sectors of economy. Perhaps, the worst sector was the large scale manufacturing. This has a domino effect of commercial as well as residential property units. The office residences saw the effects in term of less than half bookings. However, all is not last. There are tell-tale strong sings of a healthy recovery from negative growth of GDP last two consecutive years.
However, escalation in residential prices was not a sustainable growth. Government saw in this the risks of instability and un-sustainability. Government feared the bubble to burst any day. It has multiple repercussions for the economy as well as investors, which government could ill-afford. The biggest risk was the risk of middle level investors loosing the hard earned savings in this speculative market. Government of Singapore feared that this speculative buying was raising the house loans disproportionally, which was making it harder for low waged and genuine house-seekers to buy a new house or upgrade the existing one. Many analysts are already feeling the dampening effects of these price cooling measures by the government. Government has also increased the Development charges to grab a better share of high value properties. However, in spite of these measures, residential units are still witnessing increase in the prices, which indicates the speedy recovery of sluggish economy.
Trade and Finance Ministry has imposed Stamp duty on all the sales within a year of purchase, to bring down the prices, but it too seems to have little effect on enthusiastic buyers. The trend can be adjudged from buyers’ interest in NV Residences and JTV’s endeavors to shift its focus from property to large scale project management. It has kick started the venture to lure in smaller companies owning the waterfront to join hands and share the expertise, property and resources to develop marine based high tech labs and medical centers. Such and other similar projects bespeak the economic recovery on a fast track.
Demand for office space had always been a strong macro indicator of economic activity in Singapore. However, the gloom on the economic horizons hit it hard and the year 2009 saw down turn of demand for almost complete year around. However, it is no more the same anymore. The demand has turned positive and soared to new heights.
Singapore was home to more than a million visitors during the month of July 2010. This has increased the demand for hotels, serviced apartments as well as hostels. Similarly, the latest announcement by the Government to allow Permanent Residents to buy and own houses has also increased the demand. A small contribution can also be attributed to National Servicemen, who have been promised financial assistance to purchase houses. Another factor contributing positively can be cites to be the HDB’s offer of DGSS (Design, Build and Sell Scheme), which is attracting increasing number of citizens to apply for this scheme.
Government has shifted its focus on consumer spending as a stimulus to citizens’ saving and selective investments. Instead it is also concentrating on increased influx of tourists, foreign brains, investors and industrialists. It has made it mandatory for Permanent Residents to sell their native country houses to purchase a new one here. So much so that citizens are also required to produce a sale certificate to apply for loan at reduced interests.
It is strongly expected that real estate prices will consolidate at higher prices that years backed by strong, though slow, economic recovery. The demand for residential, commercial and industrial sites is bound to increase keeping in view the positive growth displayed by all major components on economy.
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