An important event on Singapore’s Forex calendar has revealed that purchases of new private homes in the city-state of Singapore rose for the second consecutive month, confirming that the housing market is starting to recover.
According to the latest report, private developers were able to sell a total of 1,246 new dwelling places in September, marking a 65% increase from the month of August. At that time, private developers were able to sell 756 residential spaces.
Compared to July, August private home sales was up 57% from a 482 figure, its lowest monthly reading since December 2009. The recent rebound has been expected by most analysts as private developers made adjustments for adapting to government restrictions on loans and home prices.
For the past few months, the government has been trying to keep a lid on surging house prices in Singapore. After all, strong price increases would make dwelling places much more expensive and might discourage demand. With that, the government has imposed curbs on loans to prevent soaring interest rates.
Compared to the same month in 2012 though, home sales are still down by 52%, which means that the Singaporean housing market has a long way to go before recovering to its previous levels. The slump in home sales for July was seen to be a result of the central bank’s decision to make rules to discourage imprudent property loans.
In addition, the Monetary Authority of Singapore ramped up its efforts to close loopholes in mortgages that previously allowed home buyers to skirt loan restrictions from banks. In doing so, they added to the security in home buying and was able to stabilize the financial sector.
Further increases in private home buying could provide support for construction activity and sales of items such as furniture and appliances. After all, a purchase of a new home typically comes with additional purchases and increased household spending.
A continued recovery in the housing market of Singapore could also provide support for its overall economic performance, as lending and spending rise. This might be enough to turn Singapore’s GDP (gross domestic product) reading back in the positive territory, after printing a 1.0% decline in economic activity for the past quarter.
Meanwhile, the Monetary Authority of Singapore or the country’s central bank has announced its decision to keep monetary policy unchanged earlier last week. It is expected that house prices will continue to rise and the central bank expects that demand could stay strong for at least the next few months.
With that, the Singapore dollar has a good chance at appreciating against the U.S. dollar and its other currency majors. The central bank did not make any adjustments to the currency’s trading range for now.
Traders who trade using a forex calendar should exercise caution however, as uncontrolled appreciation of the local currency might wind up making Singapore’s exports and tourism activities more expensive in international markets. This could discourage tourists from taking a holiday in Singapore, where tourism revenue contributes a sizeable chunk of the country’s overall economic growth.
A Quick Technical Update
Of course, a Forex calendar is not all a trader needs to navigate the markets, so here is a quick technical update. For now, USD/SGD seems on track to test the nearby support levels around 1.2400 and the next support at 1.2200 should the Singapore dollar keep appreciating. A bounce in the currency pair could go all the way up to the 1.2500 to 1.2600 levels.
Don’t Rely Solely On Your Forex Calendar
You should always keep an eye on the both the technical and fundamental elements of any currency, as this will give you the best chances of success in the Forex markets. As always, trade with caution and control your risk.