Singapore’s second-biggest lender, Oversea-Chinese Banking Corp (OSCB) said the country’s disappointing property market looks set to improve after the biggest economic contraction in the past three years, The Straits Times reported.
“The long-term prospect for the Singapore property market, both on the residential and commercial side, I think continues to be attractive,” OSCB chief executive officer Samuel Tsien told the newspaper.
Residential prices have decreased for the past seven quarters which is the longest run of declines in Singapore since 2002 with the second quarter seeing a 0.9 percent drop in private home prices. Office rents also fell for the first time in more than two years. Property brokerage Cushman & Wakefield Inc. estimated that up to four million square feet of prime space could be added in 2016.
There was a 42 percent fall in home purchases in June from the previous month. This was the lowest amount of purchases this year as developers held back the sale of new projects. Unsold private housing units rose eight percent in the second quarter from the previous three months, according to government data. AsiaOne notes that 89,000 new private residential units, including executive condominiums, are scheduled to be completed during the next four years.
Singapore’s declining economy and property curbs, including higher real-estate taxes and stamp duties, are partly to blame for the lack of demand. Singapore’s GDP has fallen by 4.6 percent, highlighting the weakening outlook for Asian nations amid sluggish global growth, The Straits Times noted.
“Right now, the interest is less robust, partly because of the general economic slowdown, partly because of certain measures that were taken,” Tsien said. “Long term, the demand will definitely be there.”
However, the short term may not be so friendly. Chua Hak Bin, head of emerging Asia economics at Bank of America Merrill Lynch, warned that Singapore might enter a period of stagnation over the next couple of years.
