This is what I think will happen post 30 Aug 2010, the most hard-hitting measures ever implemented since 1996:
1. HDB prices: PRs who own overseas properties will not buy HDBs. They will turn to mass market condos or rental of HDBs / mass market condos. Rental yields for HDBs and mass market condos will increase in 2010 right till 2011.
Singaporeans who intend to buy HDBs or condos will have to make hard choices; either buy HDBs and sell their existing condos and forego the option to enter the private property market for the next 5 years, OR hope the government will roll back some measures soon, or stick to condos. I believe most will stick to private property because 5 years of MOP is too long.
HDB prices should moderate, eventually correct in 2012 to the tune of more than 10% when the supply glut hits. The glut will continue until 2013 / 2014. I don't think there's much upside from hereon. At most, HDB prices will rise around 5 - 10% until mid 2011 when the EXTRA supply comes on stream.
2. Mass market condos: Obviously, more funds will be channelled into mass market condos. Those condos who's prices stay below S$1m. But it will be offset by the fact that borrowing for 2nd homes have been cut to 70% from 80%. This means only the first time buyers will not be affected.
Again, the supply glut will come onstream in 2012. But 2011 is the beginning of TOP for most of the transactions made in 2009. And there was a LOT of transactions; more than 14k.
There's also the problem of interest rate rises in 2011 that will hit affordability. I reckon mass market condos may rise another 10 - 15% max before falling more than 15% in 2012.
3. Luxury condos: They are the least affected. I don't believe the government intends to control this area because it is the domain of the rich and the foreigners. To build Singapore up as a playground for the rich, there must be lots of entertainment outlets, casinos, resorts, a thriving private banking industry and yes, luxury properties with fantastic facilities and views. Marina Bay Suites, The Cove, etc all appeal to the jet setters.
If the stock market rallies, I believe the luxury segment will continue to rise by 15 - 20% until 2012. This prediction holds as long as the government does not impose a capital gains tax. If it does, then the foreign funds may flow elsewhere. Right now, Singapore's luxury segment is probably one of the most affordable among the developed countries. That's how the wealthy in the region compare. Mortgages are not an issue.
2012 - 2014, or when the bear market arrives, this segment will fall the most, to the tune of say 20 - 30%.
4. Landed: Perhaps if you can afford it, this is the best segment to invest because supply is constrained. Rental yields are usually very low for landed properties so it is through pure capital appreciation due to supply constrains. This segment is likely to be less affected by the latest measures and may rise by 15 - 20% until 2012. I don't foresee this segment falling much even in a bear market. Maximum drop will probably be only 10 - 20%.
Right now, there's not much upside to residential properties. Even if you leverage 5x, your upside will be around 60% max. Stocks may achieve similar returns in the same period, with greater liquidity.
I would gun for HK properties for greater volatility and less government intervention, although I wouldn't try it now.
