High Apartment Price in Singapore and Market Interventions
The cost of housing in Singapore can be pretty expensive for an individual also depending on other factors such as the proximity to the city, the relative age of the property, the quality of furnishing, and recreational activities available. Singapore is a business hub and a fast-growing destination in Asia. Therefore, the housing, especially apartments, varies. Singapore has always welcomed foreign markets; consequently, real estate has always been a haven investment for wealthy foreigners. The interest rates for homebuyers have been on the rise (Aravindan & Lin). This can also be attributed to the high demand of foreign demand, which leads the residents to be at a disadvantage. A microeconomic analysis will try to explain the attempts that can explain the behavior of organizations and individuals within an economy to revert the high apartment prices.
The markets are the individuals within an economy that play a crucial role in defining growth and setting trends for the demand and supply trends. The market model is one entity that can explain and establish the trends in the prices of apartments in Singapore. The market model illustrates how the forces of supply and demand interact with each other to determine the prices and the number or quantity that is sold. It is essential as all the other market models from it. The interaction within the market defines the relationship between the sellers of the resource and the buyers for that resource. Supply and demand in the market determine the actual market price and the volume of an entity produced. When the supply side has higher prices, the economic goodwill is supplied more. When the demand is at higher prices, the buyers will demand less of an economic good. The willingness of the people to supply and demand an entity in most cases determines the market equilibrium price. In all cases, the demand will have a downward curve as people naturally avoid buying a product that will make them spend more on something else more valuable. The supply curve, on the other hand, will go upwards. This relationship is shown because the prices determine the supply of the entity. At higher prices, the supply will be higher.
In view of the apartment prices, having a market equilibrium will level up the prices of the apartments. Finding an equilibrium will be determining the pricing that everyone will ensure that there is a price that everyone will pay for. With the apartment issue in Singapore, the demand is relatively high. It is a fast-growing country with populations that demand condos and apartments can live in within a specific time. The market now comprises more foreigners who are looking for high-end luxurious flats. Beyond that, the residents are looking for housing. Therefore, within a fast-growing city, there is an increasing span of populations, and this gives the high demand for apartments. The continuous demand is what has given rise to the prices of apartments within the country.
Reaching a market equilibrium is one that can influence fair prices for both the demand side and the supply side. This means that the supply and demand will balance each other. This means that to bring down the prices of apartments; there needs to be enough housing that can cater to the population’s demands. This means that there is a need to have a set standard equilibrium price. This is a price that will be constant within an equilibrium quantity. Therefore, for the case of high price apartments in Singapore, the effect will be on change in supply. A change in supply means that for every supply means that at every price, there is a greater quantity supplied. This is because the entities within the supply side dictate the high prices. The demand is high, but the supply is obstructing from supplying the apartments at every price. Thus, factors that can change the supply include taxes, technology, and having complements in production.
Market intervention is a measure that is coordinated by governments that interferes and modifies the market. A change in supply within the pricing of the apartments would include government intervention. Government intervention can either be in the form of regulation, subsidies, and price controls. The government’s intervention would calm the markets.
One of the government tools that it can use to calm the market includes boosting stamp duties on foreign buyers and investors with multiple homes. Stamp duty refers to the state levy paid to register a document, for instance, an agreement between two or more parties. Stamp duty varies for different types of documents. The direct impact of stamp duties is felt in the property market and the people engaging in the business (“economic impact of the stamp” 12). Stamp duties increase the value of the purchase. Private home prices drive the biggest market boom within Singapore. The government taking steps to curb the housing marketing boom will help lower the prices from the supply side. This will ensure that there will be an evenly distributed range of homes for different individuals within the market. This will also increase the land supply through tenders by introducing a subset of new buyers within the market that can cater to a category of demand, such as middle-class housing within the country.
Increasing the proportion of down payments can also wither the high prices of apartments. When the prices of homes rise, the down payments require to purchase climb. This will help cool the market because individuals will be forced to have a new reckoning price from the supply side, allowing their goods to be more accessible to the people.
Additionally, foreign demand should be boosted on the luxury homes to the highest to ensure that the people from the foreign states take through the luxury homes and there can be space to develop other more affordable homes. It can also be a way of attracting more concentration on other housing options from the suppliers. One thing about Singapore is that there is limited land and as the population continues to grow in the country, so does the pressure to supply apartments.
Elasticity is also essential to understand in establishing these measures. Elasticity measures the sensitivity of the variables to change with the influence of another variable. In this case of prices of apartments, elasticity is in line with the changes in quantity demanded relative to the prices. Elasticity will determine how individuals can change their demand depending on the amount to be supplied in response to prices. Apartments and real estate are quite an elastic field because the price of the apartments influences the decisions that individuals take towards a specific investment. A conversely elastic element is mainly affected by the changes in prices. The pricing of apartments in Singapore can be understood and defined as elastic because as the prices of apartments go higher, people look for other alternatives to housing solutions even if it means looking somewhere in other countries. An increased price of apartments means that individuals will look for other alternatives, and the buyers will find some other places to invest. Therefore, if the government decides to invest in curbing the prices, it influences the private and public housing markets. The decrease in prices can lead to a massive influx in buying homes to ensure they grab a lot during the low-interest times. Such buyers can take advantage by securing as many apartments such that when the high prices resume again, they sell to consumers at a high price.
Comparative statistics is another tool that can be of the essence in analyzing the changes in supply and demand in a single market. One thing for sure is that the decisions that a market chooses to maintain prices are dependent on such elements as comparative statistics to determine the foregoing results that can take place. Comparative statistics compares two economic outcomes before and after a change. The changes in supply and demand can be determined through comparative statistics and can also define how the decisions within a single market affect the whole economy. Comparative statistic graphs are used to determine how a curve will behave when there is an increase in price and quantity over demand. It, however, does not describe how an increase occurs. Comparative statistics of the apartment prices in Singapore would show an increase in demand if prices lowered and the number of apartments increased to a point where it would stagnate.
The real estate and apartment business in Singapore is an example of an imperfectly competitive market. The market comprises a competitive market share, high barriers to entry, a small differentiated number of buyers and sellers, and different forms of housing in place. The market will therefore find itself within higher prices from time to time because the economic environment is dictated by increased technological advancements and continuous economic fundamentals. Real estate is primarily a haven for wealthy foreigners. Therefore, the government would need to keep close tabs on the prices to ensure affordable housing for the locals.