If you have ever been in business, then you know that every sector experiences dry and plentiful seasons in equal measure. There will never be a time when all numbers align and you flow in bounty throughout. This is the same in the Singapore property market.
In recent time, the real estate market has suffered in Singapore. It seems bad enough that many were choosing to sell out and invest in other business sectors than risk the burn that seemed inevitable in real estate. As is it is now, the sector seems to be on the mend though we want to take a look at what caused the “plunge” and how it can be mended. We start with the major factor that could easily have affected the Singapore real estate market.
The demographic demands
This is often an overlooked factor since for the most part, it is more of an economical factor, and thus people assume that it does not affect the real estate scene. The fact however, is that demographic factors directly affect the choices behind most real estate decisions. Demographics define the details that define the population within a particular area, country or state. In this case, we look at the actual population of Singapore, the ages represented, their average income as well as factors such as migration patterns in and out of the area.
The population of Singapore was averaged to be 5 million in the year 2012. This has increased and dropped in the years after but we shall work with that average for this argument. The migration patterns into Singapore have been stated to be relatively low. However, being a small nation with such a population, the income per adult is relatively average, rated at around SGD3, 770/month in the year 2015, which translates to a little over 2700 dollars. Note also that this is with less than 2% of the population being unemployed.
What this means in real estate
The real estate sector has been ridden with condos that are well furnished, finished and decorated to attract top dollar rates. Most of these ask an average price of $1m or a monthly rent fee of $6,200 on average as of 2012. This, of course, may have gone up with the reigns that were put on the real estate sector by the government. This then means that even with the consideration of current projects like the upcoming Marina One Residences that attract a fee of SGD 2,257 per sqf, the average Singaporean may find it a challenge to support such a venture. However, such condominiums are still attractive to people of the higher income level as the luxury living offered by these condominiums makes a great value for their price.
While the current outlook may seem to be on the challenging side, the health of the property market will recover gradually in time to come.