For the typical newlyweds, $500,000 can go a long way. However, even this amount is not enough for a new five-bedroom Design, Build and Sell unit during a recent project launch. Should a couple desire to purchase a private condo, the amount can easily double, which can lead to a monthly several-thousand-dollar loan repayment for a long period.

Prices of resale Housing and Development Board (HDB) and private apartments have increased, and entrants who are just starting out and hope to enter the property market through resale face larger demands for cash-over-valuation.

Those who already have homes have a minor advantage since increases in the prices of properties may augment their capability to move to a new home should they wish to do so. However, this is also not risk-free. Moving to a more costly housing unit may lead to a steep fall if times change.

In yesterday’s Parliament session, National Development Minister Mah Bow Tan stated that Singapore is presently observing that signs of speculative activity have heightened although not extreme. Sub-sellers’ proportion increased and the 10,000 units sold by developers from January to July 2009 dwarf the 4,300 units sold from January to December 2008. The prices of private housing units have also gone up since June 2009.

Minister Mah also said that everybody wants to have a stable property market wherein prices move proportionately with changes in economic fundamentals. Should a property bubble arise, a critical modification must be made lest the property market and the economy suffer severe implications.

Prices are mainly a result of the correlation between supply and demand, tempered by indicators in the economy as well as certain rules, regulations and bylaws. Perhaps the latest price surge has much to do with anticipations regarding economic recovery and extremely low interest rates. Loans and cash are likely to go where money can be generated and today, many consider real estate as the Holy Grail, so to speak. However, some first-time home seekers might feel that the Singaporean government can do more in order to cool the property market.

Buying directly from HDB remains as perhaps the best choice for new entrants as it provides benefits from different incentives. However, there may be more that can be done so that home owners and home buyers can have a wider range of choices. Relaxing some specific rules and regulations can lead to more options and mean great news for the financial sector.

Opening up the HDB resale market to become an investment option may lead to prices going up, but this move will be beneficial to most HDB owners. It will also give more options to many others who want to have a better home and for those preparing for old age.

At any rate, the large number of available HDB apartments as well as future supplies of HDB units will temporarily tone down the price increases.

However, it is possible that the biggest benefit of reviewing some rules is that it will help contain runaway prices for private properties as home buyers and people who wish to rent will have more choices
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