The long awaited first loosening of the property cooling measure since 2010 is finally announced. It certainly excites the property sector although there is only a very slight adjustment. Just received a text from a developer sales team, they are going to raise the selling price by 2% end of March. That sounds bullish!
Is the price going to rise anytime soon? 3 points that investors may want to take note before jumping into the bandwagon.
Rising Interest Rate
As US Fed seems to be firm at raising their first interest rate in 2017, therefore do expect the rising mortgage interest rate. It might have some repercussion on property sector.
Vacancy rate
In 2016, with the highest number of completed private properties (around 20k units, URA data) hitting the market , the vacancy rate steadily crept up from the low of around 5% in 2012 to 8.4% in Q4/2016.
Although supply pipeline from now till 2020 has been under controlled, at around 40k unit of private properties (which is about half of 2012’s supply pipeline then) expected to be completed, occupancy rate should be observed closely for the next 1 to 2 quarters at least to see how the rental price and supply dynamics pan out.
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Reference:
Year 2016 Q4 Result https://www.ura.gov.sg/uol/media-room/news/2017/Jan/pr17-06
Year 2015 Q3 Result https://www.ura.gov.sg/uol/media-room/news/2015/oct/pr15-50
Year 2012 Q3 Result https://www.ura.gov.sg/uol/media-room/news/2012/oct/pr12-120
