Property cycles – Property in Singapore for rent
Property in Singapore for rent – The property market cycle is usually described as a 4-phase development as follows: Slump or decline stage; recession or trough stage; recovery stage and boom stage. The characteristics of the various stages of the real estate market cycle are as follows, property in Singapore for rent:
Property market cycle has 4 phases:
- Slump (decline) stage
The supply may exceed the demand due to speculative developers building more and more properties. With higher property prices, banks may restrict loans for property purchases. Funds may become more difficult or expensive to obtain due to higher interest rates. Asking prices may stay high, but there are now fewer buyers. Vacancies may start to rise. Building construction declines. The sale of vacant land or en-bloc sales slows down. With rising costs, demand for property may start to decline. A weak economy may further contribute to the decline. Property in Singapore for rent.
- Recession (bottom or trough) stage
There is now an excess of supply of properties resulting in higher level of vacancies. Prices will continue to drop and confidence in the property market will be weak. Buyers may be reluctant to take up long term investments in property. With low rentals and high interest rate, buyers may find it difficult to service their loans. As a result, there may be widespread defaults on mortgages. The foreclosure rate may increase. Higher unemployment and salary cuts may further reduce demand for property. The low point of this stage is characterized by high vacancies, low building construction rates, foreclosures, and an absence of speculation. This stage may continue for a few years. Property in Singapore for rent.
- Recovery (upswing) stage
There may be population growth and/or economic recovery and higher employment. Business and consumer confidence returns. This creates an increase in the demand for housing and other buildings. Coming out of a recession, interest rate may still be low and may encourage consumers to buy properties. Property prices may continue to rise due to the increase in demand. Property in Singapore for rent.
- Boom (expansion or peak) stage
The boom stage is characterized by a high volume of individual property sales and en-bloc sales. Higher employment and increases in salary means the demand for property will increase. The demand for new houses may outstrip the supply. With the economy in full swing there may be a shortage of labour and material costs resulting in price increases. The increase in demand will also push prices higher. Interest rates may increase due to the higher demand for loans. Speculators may enter the market. Property in Singapore for rent.
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