Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam recently said that there was some way to go before a "meaningful correction" in the property market here.
He also pointed out that over the last few years, there had been a sharp run-up in property prices.
Mr Tharman was referring to macroeconomic numbers for the real estate market, in reference to private and HDB resale prices.
According to the SRX Property Price Index, HDB resale prices are off 8.9 per cent since their peak in April 2013, while private, non-landed resale prices have declined 5.6 per cent since their peak in January this year.
These macroeconomic numbers are aggregated indicators that help policymakers gauge the performance of the economy. Other indicators include gross domestic product, household income and unemployment rates.
However, these indicators are very general in nature as they only show what is happening at the national level and may not reflect events at the micro level.
In some cases, the pain being felt by sellers is much more than what the macroeconomic numbers suggest.
For example, units at the private residential project Domus at Irrawaddy Road were trading at an average of $934 psf during the Global Financial Crisis in 2009. It is now going for $820 psf, which is about 12 per cent below its average during the crisis five years ago.
In fact, according to SRX Property, 21 private projects have units which recently transacted below how much they were going for during the financial crisis.
In contrast, there are 175 private condominiums that have achieved peak average psf price this year. For instance, Eden View in District 19 has performed well despite the
Government's cooling measures.
This private condo in Serangoon has seen its average psf price more than double from $455 when it launched about 10 years ago to $1,095 now.
What this shows is that the property market's current macroeconomic downturn impacts homes and people in different ways.
Buyers who have paid sellers below what the latter would have received during the financial crisis have benefited greatly from the cooling measures. The sellers on the other end of these deals have lost money since the crisis.
At the same time, there are sellers who are making good returns despite the cooling measures.
All real estate is local. What is happening on your street or in your block may not necessarily reflect what is happening at the national level.
Therefore, whether you buy, sell, rent or invest in Singapore, it is critical that you get the best available detailed information that properly reflect what is going on at the local level, with respect to your individual circumstances, not what is happening at the national level.
Sam Baker is co-founder of SRX, an information exchange formed by leading real estate agencies in Singapore to disseminate market pricing information and facilitate property listings and transactions. For more details on the data used in this article, visit SRX.com.sg/price-index.
Monday, Nov 03, 2014
The New Paper
Source: AsiaOne (3 Nov 2014)