Despite six rounds of cooling measure introduced to curb speculation and the quick rise in property prices over the past few years, Khaw now warns that property prices could still go north. There are several factors in play here, mainly the global environment of low interest rates, liquidity in the market and several others factors.
The US government’s next round of quantitative easing (QE3) will most likely push property prices further. Singapore’s residential property prices saw a gain of 7.5% and 4.2% respectively during QE1 and QE2. This is much milder when compared to the home price inflation saw in Hong Kong during the same period. With the QE3 coupled with prevailing low interest rates, investors and buyers see lesser reasons to leave their money in the bank. Many saw that it would be better off putting their monies in property.
Siew-Chuin Chia, Colliers Director of Research & Advisory also mentions that property prices will probably increase in the next 12 months. This is despite the fact that Singapore’s housing market is not directly impacted by foreign capital flows because about 80% of the population lives in public housing which is directly under the Government’s control. Since 2009, there were already 6 rounds of cooling measures implemented by the Government. This is including the most recent one limiting mortgage loans to 35 years. However, prices are still heading north due to strong buying interest.