Macro factors affecting real estate market – Property in Singapore for rent
Property value is affected by both macro and micro factors. The macro factors include the economic situation, employment, interest rate, political stability, population trend and government interventions. These factors are important to determine the price level and trend of the market. It tends to affect all the properties of the whole country. The macro factors affecting the real estate market are as follows: Property in Singapore for rent.
Economy
Every economy will go through phases of growth, stagnation or decline. Each phase will either cause prices of goods and services to increase or decrease. Real estate market has a direct correlation with the health or state of the economy. However it tends to lag behind the economy. Property in Singapore for rent.
Employment rate
With secure and high employment, people with saving and disposal income may be encouraged to invest in property for dwelling, rental income or capital gain. High unemployment depicts poor sentiment and worry about livelihood rather than buying high value items such as property.Property in Singapore for rent. Property in Singapore for rent.
Interest rate
Property costs a lot of money. Most buyers will need some form of loan or financing mainly from financial institutions such as banks. Such loans are secured by pledging the property as security or collateral and come with an interest. When interest rates are low, cost of owning property becomes affordable. With low interest paid by the banks to depositors, it might be better to invest in property which gives better return in the form of rental yield. There is also the possibility of a future capital gain as well. Property in Singapore for rent.
Political stability
One of the major risk factors in investing in property is the political stability in the country. A stable government provides a good platform for investors and foreigners to invest in. On the other hand, unstable political situation deters investment. Property in Singapore for rent.
Population trend
The size of an economy depends very much on the size of the population. More people mean more dwelling units are required. Beside local reproduction of its citizens, foreign immigrants and workforce play a major part in increasing the size of the population. This increase in population will boost demand for housing and will cause rental and selling prices to rise. However, when there is a reduction in the population, high vacancy of such rental property will affect both rental and selling prices. Property in Singapore for rent.
Government interventions
Government will usually step-in when property prices keep rising due to speculation and when there is danger of a property bubble forming. When property market crashes, as evident in theUSAsub-prime situation, it affects the whole economy for property in Singapore for sale/ rent. Some recent examples of government cooling measures on the property market are:
- Increase in MOP to 5 years for HDB resale flats
- Private property owners must sell their private properties if they buy HDB resale flats
- Seller stamp duty if sold within 4 years of purchase
- Limiting loan tenure to a max of 35 years
- Reduction in loan-to-value (LTV) limit for buyers with outstanding loan from 60% to 40% if the loan tenure is over 30 years or the loan period extends beyond the retirement age of 65.
Please click here to search for property in Singapore for rent.
