Singapore Property Market Benefits From Recent Rates Increase
Those who are looking to invest in the Singapore property market can benefit from the recent rates increase, as it will have a positive impact on the property market in the near future. However, there are several factors that will impact the prices of the properties. The first is supply and demand, and the second is the amount of housing units available. Ultimately, the supply and demand will play a role in determining the prices of the properties.
Private residential property prices rose by 2.1% in the fourth quarter of 2020
Despite the deep recession, private residential property prices in Singapore rose by 2.1 percent in the fourth quarter of 2020. Pent-up demand offset the effects of the recession. Prices are expected to rise by a further 1% to 4% in 2021.
Price increases were led by the non-landed segment in the fourth quarter, but landed homes also experienced a slight decline. The vacancy rate for completed private residential properties in the core central region was 9.2%, while it was 4.2% in the outside central region.
The fourth quarter of 2020 saw the largest quarterly increase in the Housing Price Index in almost two years. It increased nine tenths of a point, and is now up more than four percent on a year-on-year basis.
The housing market in Singapore will continue to be supported by ample liquidity. The resale market will also see increased activity. The volume of secondary market sales rose 36.9% year-on-year, and was up 5.6% in the third quarter of 2020.
Supply or shortage of housing units will ultimately affect property prices
Depending on the supply and demand of housing units, the price of a property can vary from one region to another. In this respect, the Singapore property market is a key indicator of the economy’s performance.
The housing supply-demand equation is complex to measure. However, some estimates suggest that the supply or the lack of supply is the main driver of Singapore’s real estate prices. In order to mitigate the adverse impact of a housing supply crunch on private property prices, the government has introduced a series of measures, including Additional Buyer’s Stamp Duty (ABSD), the Total Debt Servicing Ratio (TDSR), and the resale price index for public housing flats.
The government’s efforts to cool the property market have been highly effective. For instance, the resale price index for a public housing flat showed a 2.4 percent increase in the first three months of the year. The government also has a plan to make it easier for companies to purchase assets from indebted developers.
New condo launches continue to do well
Despite recent property cooling measures, new condo launches in Singapore continue to do well. This has been a result of pent-up demand for new projects in the city fringe. In particular, new launches in Districts 8 and 15 have seen robust buying activities. These launches will help to ensure that the demand for new condos in Singapore is not dampened by the ongoing government cooling measures.
During the weekend launch of AMO Residences, which is a 372-unit condominium project in central Singapore, 98% of units were sold. This was also the case for Copen Grand, a 639-unit executive condominium in western Singapore, which sold 73% of its units.
The government has also introduced a series of property cooling measures, including stricter debt servicing ratios for homebuyers and lower loan-to-value (LTV) limits for loans under 30 years old. These measures have been introduced to ensure that prices in the housing market do not rise too quickly.
Singapore property market outlook 2023
Despite the recent price increases, property analysts are confident that Singapore’s property market will survive. Compared to the property price declines in other major markets, Singapore’s property market is expected to remain stable in the near future.
The demand for Singapore homes is supported by strong household income and a tight domestic labor market. A tight supply of private residential properties has also boosted the demand for property. In addition to this, the scarcity of available homes in Singapore helps to keep prices stable.
The rental market for apartments has been gaining momentum over the past two years. In fact, rental rates for apartments have increased by 8.3% in the third quarter of the year. The increase is attributed to delays in the construction of new HDB flats, which have caused a corresponding increase in rents.
The rental market is expected to continue its short-term trend. Rents for landed properties rose 10.9% in the third quarter, while rental rates for apartments and residential condominiums jumped 8.3%.