Many buyers are choosing to acquire properties now, fearing that prices may surge in the coming years. As a result, demand in future could drop even more than expected leading to an oversupply, said Wing Tai Chairman Cheng Wai Keung.
“On top of that if the economy is not so good at that time, it will compound the problem.” He added that the current housing cycle has exceeded his expectations.
“The effects of five rounds of property cooling measures have been short-lived. And despite the fact that the government has increased supply for so many years, the property market has not subsided. This means the pent-up demand is more than I expected,” noted Cheng.
He attributed this to a combination of factors such as past undersupply, population growth and liquidity.
Cheng reckons that from 2003 to 2005, when the economy was not performing well, people only bought properties if it was a necessity. Now it is the reverse.
“Because of liquidity, people feel more secure, and even though the government continues to say that the economy is not doing well, apparently Singaporeans are still confident in general. Now some people may be bringing forward their buying (decision), thinking: ‘I’d better buy now because prices are going up.”
“But my argument is that there is a danger of people bringing forward their demand, so subsequent years’ demand may be lower than what they call average demand every year (based on current demand statistics).”
“This will create an even bigger supply and demand inequilibrium; it will create an oversupply more than we think.”
Source : PropertyGuru – 2012 Jun 7