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Credit and a Competitive Market

             The property industry as a whole in regards to Singapore is a very competitive market. This is mainly due to the size of the country being very small and the high amount of demand for properties. Generally, the prices of properties have been increasing steadily over the years and the increment in prices is due to the property market boom that occurred in 2007. The property market boom caused prices to drastically increase, especially in residential properties, and there are a couple of reasons behind the property market boom. Firstly, the scarcity of land in Singapore makes it a very precious asset and the use of land is carefully planned by the government. This has resulted in high land prices and property prices have increased as well due to the high land prices incurred by property developers when developing a property. .
             Secondly, the low interest and long tenure of housing loans offered by banks encouraged the demand for properties over the past few years. The favourable loan terms were caused by the low rates of the United State Federal Reserve funds which are then tracked by SIBOR. Thirdly, the influx of immigrants over the years resulted in the growth of Singapore's population exceeding the amount of properties being developed. This led to an overwhelming increase in demand for property and with high demand, the price naturally increased as well. .
             Lastly, the quantitative easing in the United States also contributed to the dramatic increase in property prices. The quantitative easing implemented by the US government created a lot of excess liquidity in their economy and these foreign investors were looking for an avenue to invest their excess funds. Singapore's property market, which is widely seen as an investment haven, was a prime location for these foreign investors to invest their funds and this pushed the demand for property up. In addition, the foreign investors also created excessive speculation in property prices.

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