Budget 2016 introduces some subtle, but significant, policies. In particular, we note that the government is sticking to its long time promise of affordable housing. Despite brushing off calls for the lifting of cooling measures, we feel that Minister Heng Swee Keat has nonetheless put in changes that could have a positive effect on the property market.
How Budget 2016 brings indirect upsides to the property market:
First, let’s get one thing out of the way: cooling measures are here to stay. The immediate reprieve that developers and property agents hope for is still far on the horizon, but there’s no need to mourn just yet. Some of the new schemes introduced in Budget 2016, we believe, will provide an indirect upside to the property market:
- The Jurong Innovation District is good news for the area
- Support for PMETs is support for the property market
- Continued support for the principles of home ownership
- Revitalisation of heartland shops
1. The Jurong Innovation District is good news for the area
We already know the Urban Redevelopment Authority (URA) sees Jurong as a “second CBD.” The Jurong Gateway Project also bodes well for rental yields and capital gains in the area, over the long term.
The addition of the Jurong Innovation District just adds more good news to the mix. This will be the “Industrial Park of the Future.” According to Minister Heng Swee Kiat, “This has the potential to transform how we live, work, play and create”.
Now the development is still far away for now. It’s expected to be completed in Jurong West by 2020. But think about what that means:
Jurong will house the hottest new industrial park, the High Speed Rail, as well as benefit from the massive investment into the Jurong Gateway project. Anyone living there might look out their window four years from now, and suddenly realise they’re living on the new Shenton Way.
This news makes Jurong West a goldmine for investors, who will be drawn by the potential for high rental yields.
2. Support for PMETs is support for the property market
In we experienced the biggest number of layoffs since the financial crisis of 2008/09. Professionals Managers, Executives and Technicians (PMETs) accounted for 51 per cent of the layoffs.
This was accompanied by news that the older, highly trained PMETs are having a harder time finding employment, and there is little guarantee of a new job with comparable income.
This is does not favours for the flailing property market. The older, highly trained PMETs are the Singaporeans most likely to buy private property. The ones who find they cannot service their home loans, due to retrenchment, might also downsize and put their current homes on the market. This adds further supply in an environment of declining prices.
Cooling measures remain the main culprit of declining property prices, but this job situation aggravates the problem.
The Adapt and Grow Initiative indirectly helps the private property market, by ensuring a key demographic retains – or regains – the ability to buy. Under this scheme, wage support is given to companies willing to hire retrenched workers; and the Professional Conversion Programme (PCP) offers retraining for older workers.
While it’s not going to make everyone rush out and buy houses, it does ensure more PMETs are still able to afford them.
3. Continued support for the principles of home ownership
Singapore has the fourth highest rate of home ownership in the world. And the long standing mentality of Singaporeans – that the home is the primary asset – is part of what drives our property market. It creates the aspiration to own homes, and to upgrade into bigger and better homes.
The Fresh Start Scheme provides $35,000 to families with children living in rental flats. This will allow them to own a two-room, on the provision that the parents stay employed, and the children go to school.
We know that doesn’t help developers who want to offload their units right now, but we’re looking at the bigger picture. As long as Singaporeans see and feel that home ownership is within their grasp, the desire to do so will remain strong.
4. Revitalisation of heartland shops
$15 million a year will go into revitalising heartland shops. This has been overlooked in the face of grander schemes – but the way we see it, it’s an improvement on amenities. Part of the advantage of HDB living is having access to these small shops, which add more than convenience; they are also part of neighbourhood life, and contribute to the vibrancy of the community.
Restoring some of these run down shops, or making them more interesting, can have unexpectedly powerful results on surrounding property values. Consider how in old areas like Tiong Bahru, the repurposing of old heartland shops into artisanal cafes and craft stores have added to property values.
We’re not assuming the revitalisation will be so grand (will it?), but it’s not unreasonable to see it as a kind of upgrade to the neighbourhood as a whole.
Looking to sell your property?
Whether your HDB apartment is reaching the end of its Minimum Occupation Period (MOP) or your condo has crossed its Seller Stamp Duty (SSD) window, it is always good to know how much you can potentially gain if you were to list and sell your property. Not only that, you’ll also need to know whether your gains would allow you to right-size to the dream home in the neighbourhood you and your family have been eyeing.
One easy way is to send us a request for a credible and trusted property consultant to reach out to you.
Alternatively, you can jump onto 99.co’s Property Value Tool to get an estimate for free.
If you’re looking for your dream home, be it as a first-time or seasoned homebuyer or seller – say, to upgrade or right-size – you will find it on Singapore’s fastest-growing property portal 99.co.
Meanwhile, if you have an interesting property-related story to share with us, drop us a message here — and we’ll review it and get back to you.
Join our social media communities!
Main Facebook page
Facebook #All Things HDB page
Facebook #Condo-Maniacs page
Facebook #UHNWIs Luxury Homes page
Leave a comment