Singapore’s property market will be in the doldrums this year. Here are 3 reasons why
The latest data from various Singapore’s government agencies do not look good suggesting a sluggish property market ahead.
By Khalil Adis
If you are feeling the heat from the sluggish economy, you are not alone.
In fact, chances are if you are running a business, you would have noticed more businesses rolling down their shutters since the beginning of 2019.
Meanwhile, workers are worried about job security.
Coupled with the current China-US trade war, this will have a significant impact on Singapore’s export-dependent economy and the job market.
As such Singapore’s property market is expected to be in the doldrums this year.
Here are three key indicators:
#1: Non-oil domestic exports (NODX) decreased by 15.9% in May 2019
The latest figure from Singapore’s trade agency, Enterprise Singapore, do not look good with a decline recorded in non-oil domestic exports (NODX) due to China, Taiwan and Hong Kong in May 2019.
The drop was partly due to a sharp decline in shipments to China, following the 10.0 per cent decline in April 2019.
The national trade agency said both electronic and non-electronic exports decreased.
On a month-on-month seasonally adjusted basis, NODX rose by 6.2 per cent in May 2019, after the previous month’s 0.7 per cent decrease.
Non-electronic NODX grew while electronics declined.
On a year-on-year basis, total trade decreased by 2.1 per cent in May 2019.
This was after the 3.2 per cent growth in the preceding month.
Meanwhile, total imports declined by 0.5 per cent in May 2019, after the 7.6 per cent rise in the previous month.
Total exports decreased by 3.4 per cent in May 2019, following the 0.5 per cent decline in April 2019.
The largest contributors to the NODX decrease were China (-23.3 per cent), Taiwan (-34.7 per cent) and Hong Kong (-24.8 per cent).
Overall, exports to the majority of Singapore's top markets decreased in May, except to the US.
#2: More workers were retrenched in the first quarter of 2019
With trade declining, it has had a knock-off impact on the job market.
According to a report released by the Ministry of Manpower on Thursday (June 13), more workers were retrenched in the first quarter of this year compared to the previous quarter and a year ago.
The ministry’s latest report said this increase was driven by manufacturing and affected workers in production and electronics.
For example, as of the first quarter of this year, 3,230 workers were retrenched.
This was higher than the quarter before with 2,510 workers affected and a year ago (2,320).
The top reason cited for retrenchments was business restructuring and reorganisation.
Meanwhile, the number of job vacancies declined following seven quarters of increase.
According to the ministry, it declined from 62,300 in December 2018 to 57,100 in March 2019.
#3: Government to reduce the supply of private residential units for the second half of 2019
According to the Urban Redevelopment Authority (URA), there is a large supply of around 44,000 private housing units in the pipeline.
This comprises around 39,000 unsold units from the Government Land Sales (GLS) Programme and en-bloc sale sites with planning approval, and an additional 5,000 units from sites that are pending planning approval.
In addition, there are around 24,000 existing private housing units that remain vacant.
“Given these factors, the Government has decided to reduce the supply of private residential units on the Confirmed List for the GLS Programme,” the URA said in its statement.
As such, the GLS Programme for the second half of 2019 will comprise five Confirmed List sites and eight Reserve List sites.
According to the URA, these sites can yield about 6,430 private residential units, 92,000 sq m gross floor area (GFA) of commercial space and 1,100 hotel rooms
The five Confirmed List sites are private residential sites (including one Executive Condominium site) which can yield about 1,715 private residential units (including 480 EC units).
Singapore is a very open economy and will be the first in the region to experience the shocks arising from the ongoing trade wars.
However, this will be mitigated by government spendings in building infrastructure projects such as the upcoming Thomson East Coast Line (TEL) and the Cross Island Line (CRL).
Meanwhile, the large supply of private residential units will favour tenants and buyers as they will be spoilt for choice.
It will also mean the rental and resale private property market will likely see a price decline due to the supply in the pipeline.
Vacancy rates for private properties will also increase.
As such, landlords will likely drop their rentals as more units come on-stream.
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