Singapore Property Prices Trend
Private housing prices have steadied after the government doubled ABSD rates for foreigners in April. Meanwhile, HDB resale flats remain popular with home seekers eager to upgrade from starter homes.
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1. Private Housing Prices Declined
As interest rates have increased, demand for private homes has fallen off significantly in recent months. The government has responded by taking several market-cooling measures such as increasing Additional Buyer Stamp Duty (ABSD) rates for foreign buyers up to 20%-30% of property price; restricting land sales; and mandating minimum purchase requirements for foreign buyers.
Home prices in one of the world’s most expensive cities have begun to fall again since 1Q2020, according to flash estimates from the Urban Redevelopment Authority. Analysts warn this could continue throughout the remainder of 2018.
However, Singapore’s property market may continue to expand despite cooling measures due to limited private housing supply and robust economic growth, according to real estate agents. They anticipate private residential prices will increase between 1% and 3% this year compared with last year when quarterly price growth averaged 2.5% on average.
2. HDB Resale Flats Keep Buoyant
Though property prices and demand have not declined significantly despite an uncertain housing market, there are signs of the market peaking due to Government cooling measures and an upsurge in BTO flat launches in central Singapore townships. One such project, Copen Grand by City Developments and Hongkong Land unit MCL Land in Tengah saw 73% sold within its weekend launch phase alone while new condo launches such as AMO Residences by billionaire Wee Cho Yaw’s UOL Group or Lentor Modern by Malaysian billionaire Quek Leng Chan’s Guocoland have all seen robust home sales as well.
Still, many upgrades may be discouraged by a higher ABSD rate that was raised from 30-60% for foreign buyers as of April 26. This should reduce housing demand as additional cooling measures impede market recovery this year and Covid-19-related risks and rising interest rates diminish household cash reserves further.
3. Foreign Buyers Deterred by New Rules
Foreign demand has dropped this year in response to higher interest rates and additional market-cooling measures, including an additional buyer’s stamp duty (ABSD) surcharge on foreigners purchasing residential property, such as new launches – it was increased from 20% previously.
One agent noted that the higher ABSD makes purchasing private real estate uneconomical for certain foreign buyers, particularly from Indonesia. Trisni Djohari of PropNex mainly serves clients from Indonesia and her enquiries fell significantly following the ABSD increase.
She believes Singapore’s current cooling measures could benefit in the long run, as economic recovery occurs and quarantine-free travel arrangements with more countries resumes, foreign demand should increase again and global mobility wealthy may still pay the premium imposed upon them by global mobility restrictions, Djohari noted. A recent launch by City Developments and Hongkong Land’s unit MCL Land in western Singapore named Copen Grand sold 73% of its units over its debut weekend, she pointed out.
4. Condo Rents Fall
Are You Searching for Your First Condo in Singapore? Recent months may bring welcome relief, with URA reporting that private housing prices have actually seen a reduction.
But Malaysia’s property market is far from dying. A number of upscale projects are expected to be completed soon and these are drawing buyers from both overseas and Malaysians who cannot access the market due to new rules.
As property prices skyrocketed out of control, the government took measures to cool its red-hot property market – including raising additional buyer’s stamp duty (ABSD) on foreigners to 30% and increasing interest rates to further depress demand. These interventions have proven successful.
However, it is too soon to determine whether the market has reached its peak. Reestablishing momentum will take time; yet all signs point in that direction if this downtrend continues for too long; otherwise it could make owning condos in Singapore less appealing.