Signs of Economy Slowdown

A sign that property market in Singapore has cooled since the peak in late 2007 was reflected in slower sales and take up rate. At it's peak, new property launch could be completely sold out within days (with one development in Thomson being sold out before actual launch).

It was also reported in "weekend Today" newspaper dated 1 March 2008, "Small development tax increase sign of property slowdown". In the article, the writer cited that the Ministry of National Development yesterday announced minimal changes in development charges for residential sites. Other extracts from the article as follows:

"It is encouraging to know that the Government has made minimal changes to the development charges for residential use, a reflection that it is mindful of the current market sentiment and the uncertainties ahead," said Mr Li Hiaw Ho, executive director of CBRE Research.

Mr Donald Han (MD of Cushman and Wakefield) attributed the vitually flat rates to the lacklustre market for private homes, as well as of residential sites, in recent months. He noted that the property market started deteriorating in December as sentiment turned cautious amid uncertainty over the extent of the fallout from the sub-prime crisis in the United States and stock market volatility.

Statistics from the Urban Redevelopment Authority showed that the number of new private homes sold in December shrunk by half from the month earlier, while January numbers were flat.

Many signs have suggested that the US economy is at the brink of recession, from falling propery prices to decline in job market. Despite that, the fallout may be coming to an end. The credit crunch had many banks and financial institutions reporting billions of dollars in losses from the crisis. All these have been taken into account, the economy has absorbed the downturn. So long as these insitutions had been truthful in their reports and not hid any other bad news, the credit crisis may have settled down a lot.

A lot of funds from other countries have been pumped into the financial institutions in US and Europe to help them overcome their shortages of funds and to contain the fallout. Singapore alone has pumped in nearly tens of billions into various financial institutions and many Middle East countries and their investors have also injected funds into the troubled institutions.

Not deniably, these investments may see good returns in the coming years but they are also concern of the impact from the fallout, in their (investors) domestic economy. Singapore has a lot of major projects being planned and developed currently, that a US recession will not do us any good. Some of the major investments includes, Formula 1, Integrated Resort, hosting of Youth Olympic, etc.

From the looks, the current dust is settling and may take up to another year or two to start coming up again.