‘Too soon’ to call property market recovery despite renewed interest: Redas president

‘Too soon’ to call property market recovery despite renewed interest: Redas president
A man walks on an observation deck overlooking private high-rise residential condominium properties in the prime Orchard Road district in this Singapore April 15, 2014 file photo. Photo: Reuters
Published: 12:15 AM, February 11, 2017

SINGAPORE — Despite the renewed interest in residential launches in recent months, it is “still too soon” to conclude that a market recovery is in sight, Real Estate Developers’ Association of Singapore (Redas) president Augustine Tan said on Friday (Feb 10), as he pointed to a persistent glut in all segments of the property market.

“With the weakened labour market, slower growth in employment and earnings, declining population growth, coupled with the prospect of rising interest rates, the current slowdown is expected to continue into 2017,” he said in his address to about 570 attendees at the association’s Spring Festival Lunch.

Private home prices fell 0.5 per cent in the last three months of 2016 to hit their lowest level in six years, as the longest falling streak on record was extended to 13 consecutive quarters, Urban Redevelopment Authority data showed last month. For the full year of 2016, prices fell 3.1 per cent, the data showed.

“Dampened demand and rising operating costs remain key concerns with property cooling measures still in place alongside slow economic growth. All segments of the property market continue to reel from the persistent oversupply situation, rising vacancy rates and weak demand,” Mr Tan said.

External conditions also weigh on the market and prospects remain murky with uncertainties surrounding global geopolitics and macroeconomic developments, he added.

The vacancy rate for private homes last year was the worst in more than 10 years at 8.4 per cent, close to the high of 8.6 per cent in 2005 when there was an oversupply of private housing stock, noted Mr Tan.

“The situation now is exacerbated by difficult business conditions, company restructuring and reduced headcount, especially that of expatriates. This has put pressure on rents, which fell 4 per cent.

“This picture is repeated in other sectors of the property market. Office prices and rentals, under pressure of oversupply and lacklustre demand, saw declines of 2.8 and 8.2 per cent, respectively, in 2016. Islandwide vacancy rate at the end of 2016 rose to 11.1 per cent, close to the last high of 11.7 per cent in the first quarter of 2012,” he said.

Equally worrisome is the rise in unemployment. Singapore’s overall unemployment rate rose to a six-year high of 2.1 per cent last year. A total of 19,000 people were made redundant last year, a 22 per cent increase from 2015, Mr Tan noted.

Ahead of the Budget on Feb 20, Mr Tan said Redas’ wishlist includes a review of Singapore’s property tax policies, improved transparency in the valuation process, reduction in business costs and regulatory fees, and special training grants to enhance maintenance skills and technical expertise.

The association added that it looks forward to participating and contributing to the key areas drawn up by the Committee on the Future Economy (CFE). It wants to weigh in on topics such as innovating, developing and adopting digital capabilities for the real estate industry, elevate skills and raise the bar of competency within the industry, and play a part in developing Singapore into a connected and sustainable city.

“The (CFE) recommendations on urban solutions provide a wide scope for Redas members to respond with our collective action plans. Specifically, we will garner feedback from our members on how we can partner the public sector in the master developer scheme to develop, place-make and manage future precincts. We will support the Government’s efforts to establish a formal place management framework to rejuvenate and realise more vibrant districts within the city,” said Mr Tan.