Property developers and property brokers say there was less activity in the private rented housing sector in January, continuing a steady build up from the previous December. Leedon Green condominiums in Singapore saw the biggest increase in sales, followed by Mandarin Oriental and New Edge towers. Property analysts say the low activity may be due to market saturation in some areas such as the northern part of the city, or the lack of supply in the peripheral areas of Singapore like Orchard Road. Whatever the reason, the January sales figures suggest that builders have not eased off their appetite to build new homes and apartments, despite a recent slump in the industry.
The government has been taking action to attract more domestic labor and curb high unemployment among the Chinese and Indian immigrants who make up most of the population. The recent tightening of the migration policy – a cornerstone of the People’s Republic of China’s decades-long effort to open up its economy – is thought to be having an effect on the foreign workforce in Singapore, making Singaporeans less willing to risk leaving the country to settle down in one of its many suburbs. Some economists also believe the slowdown in the property market is being driven by a phenomenon that economists call “structural unemployment”, whereby workers are losing their jobs because of the global recession and are reluctant to move companies, resulting in fewer opportunities for them outside the job market. Another factor affecting Singapore’s Singapore real estate price growth is the relatively low rate of immigration, at around two percent, compared to the European and American averages.
On a broader scale, the Singaporean economy remains reliant on heavy investment and human capital. The current influx of Chinese and Indians, as well as high numbers of expatriates from South Korea, India, and Pakistan, has helped boost the economy, but the rate of inflow depends on factors such as unemployment and the acceptance of foreign labor into the country. The slowing economy and falling domestic demand has meant that businesses have had to reduce operating costs, and this has affected hiring and salaries, especially for unskilled workers. This, in turn, has led to some employers reducing the number of skilled workers they hire, thereby reducing the employment rate and exacerbating the unemployment problem.
On a more dire note, the slower economic growth and dwindling demand for labor have resulted in an increase in the population of the country’s rural regions. Because Singapore does not have an inclusive national identity, there are marked racial and ethnic gaps in the rental properties on offer. While the majority of the population is Eurasian, there are still significant minorities such as Malayans, Indian, and Chinese who have set up their own communities, competing with each other for the available commercial properties and working the land in the search for work or education. These trends do not bode well for the future of Singapore’s economic development.
On the flip side, Singapore’s economy has been propped up by its steady inflow of foreign labor, especially from Malaysia, India, and the Philippines. This influx of labor, combined with the continuing inflow of immigrants from other nations, has kept employment rates stable and inflow of people of different races at a reasonable level. The only potential problem on the horizon is the possibility of an increase in the inflow of illegal aliens, as the authorities are taking precautionary measures to curb the entry of unauthorized immigrants into the country. However, given the relatively lenient attitude Singaporean authorities have shown in allowing foreign workers, even illegal aliens, to work in the country, the spectre of an inflow of unskilled workers is negligible.
All in all, while the inflow of workers has buoyed the economy of Singapore, the slowing of that economy has implications far beyond the property market. For instance, when Singaporeans are unable to find jobs in the city due to the shortage of workers, the result is an increase in unemployment throughout the country. While the native workers are unemployed, companies in Singapore have to rely on foreign labor to fill vacant positions, thereby driving up the cost of labor in the country, something that is bound to adversely affect the domestic economy. Ultimately, whatever the impact of the inflow of immigrants and their subsequent impact on the employment rates and the real estate prices of Singapore, the overall impact on the national economy is negative.