The question on everyone's mind is when.
Let me try to second guess that.
According to official numbers from the Urban Redevelopment Authority, property prices have risen some 62% from the trough in 2Q 2009 to the peak in 3Q 2013. In pure numbers, it means if property price on a per sq ft basis is $1,000 in 2009, it would have risen to $1,620 psf in 2013.
Source: URA
How much has property prices fallen based on the official price index? Around 9.1% as per the flash estimate for 1Q 2016. It means prices now are around $1,472 psf. Compared to the trough in 2Q 2009, prices are still 47% higher.
This also means property prices have appreciated on average 8% per year from 2009 to 2015. Have our economy grew on average 8% per year over the same period? The answer is no. So property prices have ran ahead of the economy.
So that is probably why the Government is not doing anything.
My guess is a comfortable range in the mind of the Government will be between 15 and 20% fall from the peak. If prices did indeed fall by this amount, the average price appreciation per annum is between 4 and 5%. This price appreciation is closer than economic growth.
|
|
15% from Peak
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20% from Peak
|
|
Estimated Property
Prices at end 2016
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$1,377 psf
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$1,296 psf
|
|
Average Price
Appreciation per annum
|
5.4%
|
4.2%
|
Source: Real Property Advisory Singapore
When will that happen? Again my guess is by the end of 2016 because 2016 will see the largest number of unit completed.
