Outlook on Singapore Residential Property Market

Singapore’s property staged an amazing recovery, with the 9M09 recording a 115% increase over 9M08. However, in October, the total number of sales was 811, a drop from 1143 the month before, and the first time since January that home sales have dropped below 1000. As compared to Oct 08, it was a 284% increase in number of home sales. The low figures in Oct 08 are most likely due to the onset of the financial crisis. According to the CEO of PropNex, Mohammad Ismail, the last two months of 2009 will see a total of less than 2000 home sales, adding that the demand built up from the financial crisis has been spent.

The high increase in home sales 3Q09 was driven by the Interest Absorption Scheme and Interest Only Housing Loan, and with the removal of those schemes, it will definitely slow down the speculation on the property market. Furthermore, with the reinstatement of the Government Land Sales Program, it will only dampen speculation.

For 2010, the tune that is being played is the opening of the IRs, and with the highest proportion of home sales will come from high end apartment sales. I believe that home sales will stay around the 1000 level mark for the 1Q09, before tapering off to drop below 1000 after the impact of the opening of the IRs has blown over.

With that, I believe the 2 companies to look at, Ho Bee and Keppel Land. Many analysts have labeled Keppel Land as a Buy. Another company to look at is UOL, with its strong performance in 2008 and 9M09.

I remain neutral on the property market, as the future of the Singapore property market would be uncertain after the impact of the IR is over. A review will be done again a month or two after the IR opens.