4 main reasons the Singaporean housing market won’t crash
Forecasters frequently use hedging strategies, especially when attempting to predict the movement of prices of newly launched condos like The Continuum. For this reason, Morgan Stanley should be commended for having the courage to voice its opinion that the remarkable rally in Singapore home prices had reached its peak. Singapore’s real estate market has been one of the most stable in the world in recent years.
Morgan Stanley predicted that “the end is near for what has been a historic rally in The Continuum Showflat private home prices” in a report released earlier this month. The bank predicts a 3 percent decline in floor plans values next year following a seven-year-long rally, “marking the start of downcycle”.
In a market where prices rose by nearly 20% in 2021-22 and are predicted to rise by another 4-5% this year, this prediction would represent a dramatic reversal of fortune.
Morgan Stanley said the drop in prices would be caused by a combination of much weaker demand and a sharp increase in supply. Along with the reversal of the demand-supply imbalance, it cited “regulatory deterrence for foreign buyers” and “a narrowing pool of public housing upgraders” as major factors that would lead to falling home prices.
Luxury flat rents in Hong Kong increased by 1% in the third quarter from the previous three-month period, while rents in Singapore decreased by 1.7%, according to research by Knight Frank.
Singapore has started to address its sizzling hot rents, which began rising during the coronavirus pandemic, while in Hong Kong, the increase in rents was partly attributed to government measures aimed at attracting more foreign talent to the city.
Singapore was, however, behind only Sydney among the 10 cities that Knight Frank tracked in terms of annual rental changes. According to Knight Frank, rents in the Lion City increased by 14.5% over the past year, while in Hong Kong, which ranked #10, rents increased by only 1.6%.
According to the report, Singapore is one of three exceptional markets where rents have increased dramatically since 2021. In comparison to the cumulative increases of 55.2% in London and 53.4% in New York, rents in Singapore have increased by only 50.3%.
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