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Cost of living causes Singaporeans to look down under

Posted on 9 May 2012 | Comments Off

Adelaide has reflected South Australia as a whole with its recent population boom and healthy real estate market.

According to a recent press release by Optimizer Capital, South Australia, on a risk adjust basis, represents one of the best property investments of the next 10 years.

Optimizer Capital reported that Singapore is currently at the top of its cycle and is showing a poor market outlook for 2012 and 2013. Real estate analysts forecast a 5 to 10 per cent drop in property prices this year.

Due to Singapore’s property prices at an all time high and rental yields being low, it is suggested that investors could be overpaying for the potential rental income.

The annual average inflation of Singapore since 1980 is about 2.1 per cent and the Consumer Price Index is on an upward trend making it likely that the cost of living will keep increasing.

This increasing cost of living has made finding a place for retirement difficult resulting in many of the countries residents to settle down in neighboring countries, such as to stretch their retirement funds.

Investors can expect that some country’s property markets will be growing while others will be on the decline. Many investors are purchasing properties in Australia to ensure that their investments are not exposed to the risks that different countries face.

In recent years Australia has maintained a stable, diverse, and advanced economy making it one of the most popular places to invest.

South Australia has recently experienced a population boom fueled by mining, defense, infrastructure, wine, industrial growth, and education which is creating an unprecedented need for property development. The increase in population means that by 2030, 620,000 new homes will be required.

“I truly believe I’m going to witness the best property boom in Adelaide that I have seen in my lifetime,” said Adelaide’s property professor Peter Koulizos. “The thing that will drive property is people with money, and the mining industry tends to pay higher wages. As the cheapest capital city in mainland Australia, there’s a lot of focus on Adelaide.”

South Australia has a population of 1.2 million while around 2/3 of the population in South Australia live in the capital, Adelaide. The highest percentage of the population in South Australia is in the 15 30 age bracket that will be entering the housing market over the coming years.

South Australia is also expanding as a leader in natural resources and is rapidly evolving into the third biggest resource state, after Queensland and Western Australia.

The state has already become the national leader in major defense projects, including the Air Warfare Destroyer project and the future submarine fleet project. In addition, it is already the nation’s leader in alternative energy generation, an industry of growing importance.

It is expected that South Australia can expect the same kind of growth Perth saw from 2002-2012 when prices tripled and in Port Headland went up five times.

source – Property Asia 8 May 2012

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Posted in Overseas Property, Property Market / Real Estate

Tagged Adelaide, Optimizer Capital, Property Market, rental yields, Singapore Property Price

‘Shoebox’ units: Govt will step in if necessary, says Khaw

Posted on 3 May 2012 | Comments Off

The authorities could intervene if there is excessive supply

The Government is monitoring the sales of so-called “shoebox” apartments and may step in if there is excessive build-up of such units, National Development Minister Khaw Boon Wan said yesterday.

Speaking at a dialogue organised by government feedback agency REACH, Mr Khaw also allayed concerns about rising prices of public flats – there is “political will” to build at least 100,000 HDB flats if necessary during the Government’s current term, he said.

Last week, latest statistics from the Urban Redevelopment Authority showed that “shoebox” apartments – or units smaller than 50 sq m – made up 27 per cent of sales in the first quarter, a new high since such units were made available in the market three years ago, according to analysts.

Responding to a participant who was concerned with what he felt was the shrinking size of HDB flats – this could risk eroding family bonding, the participant said – Mr Khaw replied that, in this regard, his concern was with the private housing market.

Mr Khaw said he has been watching the sales of “shoebox” units by private developers in the past few months. Said Mr Khaw: “If the percentage becomes too (high) we may have to step in and say, ‘Hey, are you sure there will be demand for it?'”

Based on the profiles of buyers of “shoebox” units, Mr Khaw said he suspects that among them are Singaporeans who see them as a good investment.

For these investors, Mr Khaw said he hoped they made the “right decision”. Rental yields would be less than expected if there are too many of such units, he pointed out.

Nevertheless, he cited his recent visit to two residents in “shoebox” apartments – both of whom were single and have a pet – and noted that there are people who would be “comfortable” living in such units.

‘HDB flats not shrinking‘

On public flats, Mr Khaw said that, based on his checks, HDB housing norms have not changed for the past 15 years. “There’s been this misunderstanding that HDB has somehow in recent years shrunk the units but we have not. If you visit our new three-room, four-room and five-room (flats), they are very comfortable.”

Mr Khaw said that what the HDB has done, instead, was to start building two-bedroom units – after recognising that some of the lower income may find three-room flats unaffordable. Nevertheless, such two-room units make up a “very small fraction” of the total units on offer in each Build-to-Order project, he said.

He reiterated: “We continue to build smaller units and large units and it’s the choice of consumers.”

Mr Khaw also addressed concerns on rising HDB prices, with one participant suggesting that Singaporeans may have to “pay S$1.5 million for a HDB (flat) in 20 years”.

In response, Mr Khaw pointed out that there is a strong co-relation between economic growth, wages and property prices.

In the short term, property prices are rising as the infrastructure cannot catch up with the rapidly growing population, said Mr Khaw. Nevertheless, the property market has seen some stabilisation, following government measures in the past year, he added.

And as Singapore’s economy reaches maturity, economic growth and wages will also moderate – the latter could “even stagnate”, Mr Khaw noted. This would correspondingly have an effect on property prices here.

He reiterated that the trend of rising property prices will not continue once the Government corrects the imbalance, “which will take time”.

Source: Today