PROPERTY PRICES will fall, ThInK again.
Wealthy families are increasingly choosing to invest in Singapore, whether by purchasing properties for residency or establishing offices such as Family Home Officer. Recent reports suggest that this influx of ultra-rich individuals is unlikely to drive property prices down, as evidenced by the stable and upward trend in condo prices from 2015 to 2022.
Additionally, another article highlights a significant rise in the number of High Net Worth Individuals (HNWIs), reaching 1.41 million, which accounts for approximately 20% of Singapore's population. These articles indicate a growing confidence among wealthy individuals in Singapore's governance and the conducive environment for wealth accumulation.
The presence of HNWIs settling in Singapore brings about various economic benefits. When they invest in properties for personal use, they also stimulate demand for ancillary services such as electrical technicians, plumbers, landscapers, and more, thereby contributing to economic expansion.
Despite challenges such as the COVID-19 pandemic, which severely impacted many industries, including customer-facing businesses like F&B and entertainment, the property market in Singapore has displayed resilience. However, recent geopolitical events such as the Russia-Ukraine conflict and anticipated interest rate hikes by the Federal Reserve may signal a potential slowdown in the property market.
While these indicators provide insights into possible trends, the future remains uncertain. The chart depicting the average price growth rate of properties since 2015 illustrates the market's resilience amidst various economic challenges, but whether this trend will persist or falter remains uncertain.
Why is this advantageous when High Net Worth Individuals (HNWIs) settle in?
Because their property purchases, especially for personal residence, lead to additional expenditures on various services. For instance, if the purchased home encounters electrical issues, the owner may hire technicians for repairs. This scenario extends to other service sectors such as plumbing, swimming pool maintenance, gardening, and more. When HNWIs invest in Singaporean properties, they contribute to further economic expansion.
Despite the economic challenges posed by the COVID-19 pandemic, particularly in 2020 and 2021, during which many businesses, especially those in customer-facing sectors like F&B, entertainment, beauty, and gyms, struggled and required government assistance to stay afloat, the property market in Singapore exhibited remarkable resilience. Despite signals suggesting a potential slowdown, such as the Russia-Ukraine conflict and multiple interest rate hikes by the Federal Reserve in 2022 to combat inflation, the property market has performed exceptionally well, hinting at its continued strength.
