Singapore Real Estate Prices Increase for the 5th Straight Quarter

Singapore’s real estate market has actually continued to stay resilient in the middle of the COVID-19 pandemic, with exclusive house prices and HDB resale rates registering their fifth consecutive quarterly rise.

There are many reasons that Singapore Property Prices Increases. One of the most important is the changing global economy. Not too long ago, people didn’t care about changing economies; they just purchased whatever house they could afford. Now, even China is having a tough time maintaining its economic growth and inflation is running high in most parts of the world including Asia. With this increase in global prices, Singapore has experienced an upward trend in property prices.

Urban Redevelopment Authority (URA) information revealed that personal residence prices rose 0.8% in Q2 2021. However, the pace of rise was more moderate compared to the 3.3% walk uploaded in Q1 2021. Huttons Asia noted that exclusive home costs “have actually appreciated by 7.1% because the Circuit Breaker in Q2 2020, 19.7% from all-time low in Q2 2017 and also are now 5.8% above the previous top in Q3 2013”.

“After a solid run-up costs in Q1 2021, some landed property owners elevated their asking prices, putting themselves out of reach for some buyers and also leading to a pullback in prices in Q2 2021,” Huttons included.

There are many factors that contribute to this. One is the influx of workers from other Asian countries into the country. This has created a greater need for real estate properties in Singapore to accommodate the influx. Also with more foreign workers coming to the country, more demand for properties has been created which translates to higher prices for these properties.

A lesser-known aspect of Singapore’s property industry is the increase in tourism. While many of the countries top property markets around the world have experienced decreases in the demand for their properties over the last several years, Singapore’s property market has increased substantially. Many people from countries such as the U.K. now choose to buy properties in Singapore because it is one of the most affordable places to live.

Landed building rates dipped 0.3% in Q2 2021, after increasing 6.7% in the previous quarter. Non-landed property rates, on the other hand, climbed 1.1%, after growing 2.5% in Q1 2021. A total amount of 8,449 exclusive homes, omitting exec condos (ECs), were sold in Q2 2021, up 4.3% from the 8,100 systems moved in the coming before quarter. Particularly, new house sales decreased 15.1% to 2,966 systems in Q2 2021, while resale deals grew 18% to 5,333 units. Huttons Asia CEO Mark Yip stated resale transactions comprised 63.1% of the overall purchases quantity as a result of fewer new launches in Q2 2021.

Another contributing factor to property prices being as they are today is the government’s efforts to create more property. Since the city-state started growing at a rapid pace, the government started to promote the development of public housing. In fact, one of the main reasons why Singapore became famous for being a popular destination for tourists is because of its amazing and impressive buildings and structures. These structures included the Sentosa Island, which is the largest of Singapore’s cluster of islands. Other amazing constructions include the Parco Marina and the New islands, which are soon to become a major tourist draws.

“Demand for residential properties was strong in Q2 2021 regardless of Phase 2 (Heightened Alert),” he claimed, including that desire “for a safe house throughout the pandemic as well as investing in homes to beat inflation” are some of the reasons behind the need. The increase in property prices can also be attributed to the role of the central government. The prime minister, Lee Hsien Loong, made his decision to nationalize all commercial properties in Singapore just before the global financial crisis began. This move was meant to help the country’s economy pull out of the downturn caused by the recession.

Meanwhile, rental volume, leaving out ECs, marginally dipped 0.4% to 23,536 private residences throughout the period under review from 23,622 units in Q1 2021.

“The recent firm of boundary controls and also seeing restrictions throughout Singapore’s Heightened Alert duration was a problem to the rental market recuperation,” said Christine Sun, Vice President of Research as well as Analytics at OrangeTee and Tie.

With the readily available supply remaining minimal and the supply of brand-new houses is obstructed by building delays, the supply crunch resulted in higher rents.

URA information showed that rental fees climbed 2.9% in Q2 2021, a steeper walk compared to the 2.2% rise seen in the previous quarter.

The government is also doing its best to stimulate the demand for property prices. Recently, the property department of the government issued a notice that required any non-domestic property buyers to apply for a Buyers’ Registration No. registered with them. Foreign investors will need to furnish the government with certified copies of their identification documents. The department also stated that foreign properties rented by non-domestic residents will not be granted permits. This measure aims to control the influx of foreign capital and maintain the standard rental rate in the country.

Over at the HDB resale market, rates enhanced 3% quarter-on-quarter and also 11% year-on-year. For the very first half of 2021, resale rates expanded 6%.

“HDB resale prices have actually appreciated by 11% from the circuit breaker in Q2 2020, 11.9% from all-time low in Q2 2019 and are now 2% below the previous optimal in Q2 2013,” said Huttons.

Given the rate of cost increase, Sun expects resale costs to reach a brand-new high by H2 2021.

In reaction to the global economic crisis, Singapore’s property market is also showing signs of the effects of the turbulence. As the economy and finance industries are slowly recovering, there is a decreasing demand for property. Property prices are also affected by fluctuating interest rates, which tend to affect the demand for property. The decreasing demand for property could dampen the growth of property prices.

“The strong rate gains show durable need for flats as customers change their emphasis far from brand-new apartments which are experiencing delays in conclusion. It may likewise show that more buyers are requesting greater costs which may lead to even more instances of cash over appraisal (COV),” stated Yip.

In Q2 2021, HDB resale volume slipped 6.8% to 7,063 units in Q2 2021 from 7,581 units in Q1 2021.

Experts associated the drop in sales to more stringent measures enforced during the Heightened Alert period in May to June. The refusal of some vendors to budge on their asking prices also reduced purchases, claimed Yip.

On the other hand, the increased demand could also stimulate the economy and finance sectors. Real estate and construction industries are being developed. The release of state-of-the-art equipment and technology is boosting the economy. There are more job opportunities for people who have increased education or professional training.

“Despite the small pullback in sales, purchaser demand is still strong given that the sales volume in Q2 is higher than the pre-pandemic level,” said Sun.

The average quarter sales stood at 5,929 devices in 2019 and also at 6,187 systems in 2020.

Sunlight believes the solid demand and also home supply lack might maintain resale prices raised over the coming months.

Property prices are affected by factors beyond the control of consumers. One of the major factors affecting the property market is the political stability of the country. If there are peace and order in the country, people are more likely to invest their money in the country’s assets, such as properties. Prices tend to increase when the economy improves and the demand for properties will also increase. When the country is experiencing a financial crisis, it has a detrimental effect on the overall demand and prices of the property.

With the “supply-demand inequality” lingering this year, level rates may be pressed higher in the coming months, she claimed.

The rise of the property prices can dampen the economic growth. However, it can only be dampened if the demand for properties is low. Otherwise, prices will continue to rise because of excess supply in the market. This is not very surprising. The real estate market follows the laws of demand and supply, and since there is no dearth of properties available for sale in the country, prices will most likely increase in coming years.

“Construction delays are anticipated for numerous BTO projects and lots of young couples with immediate real estate needs might continue to resort to the resale market, although the supply lag might begin to reduce following year when building tasks continue to get,” added Sun.