The increasing number of unsold properties in Singapore is a threat to the property market, according to the Monetary Authority of Singapore (MAS).
Singapore’s central bank warned prospective homebuyers about the risk involved in the real estate market and asked them to be prudent before committing to a property or mortgage transaction.
In the Monetary Authority of Singapore’s Financial Stability Review, it pointed out that the number of unsold units from launched projects in Singapore’s property market has doubled from 2,172 units in the third quarter of 2018 to 4,377 units in the third quarter of 2019.
Besides the growing number of unsold units, the property market in Singapore is also in distress due to uncertainties in the economic outlook and a softening labour market that negatively affect households’ incomes and their demand for property.
In the Financial Stability Review, the central bank said, “This increase will likely be exacerbated in the medium term as developers continue to redevelop and launch projects on sites arising from the large volume of en bloc sales from 2017 to 2018. The increase in the unsold inventory could place downward pressure on prices in the medium term, if unaccompanied by a corresponding rise in demand.”
“Investors that borrowed at higher mortgage repayments relative to incomes, could face difficulties meeting the repayments on their investment properties.”
Another study by the International Monetary Fund revealed that private residential prices in Singapore have decoupled since 2013, mainly due to regulations in recent years targeting foreign buyers.
Recently, Singapore became the top real estate destination in Asia, according to a report released by the Urban Land Institute and PricewaterhouseCoopers.