Singapore property risk factor is decreasing instead of rising
Nov 29, 2022
By   Internet
  • City News
  • Real Estate Market
  • Real Estate Investment
  • Real Estate Risk
Abstract: Since the outbreak of the new crown epidemic, many countries have entered a state of monetary easing and the property markets in many countries or regions have started to buck the trend, but at the same time the risk of a real estate bubble is brewing.

In recent months, under the influence of factors such as rapid interest rate hikes and the risk of recession in many countries around the world, the property market in many places began to turn cold.


Australian real estate industry practitioners said: for the current rising interest rates, many buyers are discouraged, local housing and housing offers are beginning to reduce.


Some properties are reselling at 110% of the list price a year ago, while the current average price is around 90%.


This situation coincides with a recent study by the Oxford Economics Institute, which concluded that


4 countries, including Canada, New Zealand, the Netherlands and Australia, have generally higher house price inflation, high real estate valuations, high debt levels and prominent floating rate debt from Q4 2019 to Q2 2022, making the real estate market more risky.


Property industry analysts believe that the property in these countries or regions during the epidemic rose a lot, and many mortgages using floating interest rates, once faced with the impact of multiple factors such as rising interest rates and rising prices, will largely suppress property demand, which in turn triggered a double drop in the price and volume of property transactions.


UBS recently released the 2022 Global Real Estate Bubble Index report, which coincides with Oxford Economics' research. Toronto, Canada's largest city, tops the global real estate bubble list with a 2.24 rating; Vancouver, another Canadian city, also enters the global top 10 with a 1.7 rating.


According to the statistical criteria of the Global Real Estate Bubble Index.


Properties in cities with a bubble index "greater than -0.5 and less than 0.5" can be interpreted as having few bubbles and prices within the "fair value" range.


Urban properties with a bubble index "greater than 0.5 and less than 1.5" can be interpreted as having some bubbles and risks.


Urban properties with a bubble index "greater than 1.5" can be interpreted as having a high bubble and high risk.


In this year's Global Real Estate Bubble Index report, Singapore's bubble index is 0.5, down from 0.52 in 2021, and well below the bubble risk line of 1.5.


This is closely linked to the Singapore government's timely regulation of real estate policies, which was launched on December 15, 2021, with a series of regulatory policies to promote sound real estate development.


On the other hand, Singapore's real estate market is even at a lower level of bubble compared to other cities in Asia Pacific, not only lower than cities with bubbles such as Tokyo and Hong Kong, but also lower than large and globally renowned cities such as Paris and London.


After the real estate policy moderation on December 25, 2021, Singapore again introduced a new round of mild moderation on September 30, 2022.


However, amidst the strong demand in Singapore's real estate market, resale prices of private non-landed homes in Singapore continued to rise by 0.3% YoY in October 2022, marking the 27th consecutive month of sustained increases in private resale prices in Singapore.


Therefore, the continued introduction of the regulation policy is closely related to the rising trend of house prices in Singapore in the three quarters of 2022.


Singapore's private home prices rose 3.8% YoY in the 3rd quarter of 2022, with a high increase of 3.5% in the 2nd quarter, also higher than the previous estimate of 3.4%, which is the 10th consecutive quarter that Singapore's private home prices remained up.


A robust real estate market is inseparable from the orderly development of market supply and demand, as well as the timely regulation by the government.


It can be said that Singapore real estate is still developing in a "low bubble" environment, attracting the attention of investors from all over the world.