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Singapore property prices are also facing cooling off and flame out
Dec 1, 2022
Singapore property prices are also facing cooling off and flame out Singapore
By   Internet
  • City News
  • Real Estate
  • Housing Market
  • Real Estate Trends
Abstract: Today, the property markets in various countries have been hit hard by the unprecedented global monetary tightening policies.

According to statistics, in the second quarter of this year, the price of private homes in Singapore rose at a rapid rate of 3.5%, which is also five times the 0.7% increase in the previous quarter.

 

Meanwhile, non-landed property (non-landed) rents in the central core increased by 5.9%.

 

More tenants signed leases of at least two years. The Singapore property market is looking quite strong in the midst of a generally cooling global property market.

 

Meanwhile, the Monetary Regulatory Authority of Singapore curbed inflation with a tightening of monetary policy in July.

 

This is the second time in 2022 that the Monetary Authority of Singapore has tightened its monetary policy.

 

With the implementation of the monetary policy, the once-hot Singapore housing market also began to cool down, with home sales in October this year falling to the lowest level since April 2020.

 

According to data from the Urban Redevelopment Authority of Singapore, private apartment sales in Singapore fell to 312 units in October, about a third of what they were in September.

 

In addition, demand in Singapore's secondary housing market also fell in October, with resales of private condominiums down about 12 percent and public condominiums sold exclusively by the Housing and Development Board down 24 percent.

 

Some analysts previously expected a reduction in demand for buying homes due to borrowing restrictions, the recession and the lack of new housing projects starting in the fourth quarter.

 

And affected by property cooling measures and the lack of new project launches, Singapore's private home sales fell 18.3 percent to 810 units in October from a year earlier.

 

Among them, Copen Grand was the top new private home sales in October, accounting for nearly 60% of the total private home sales in Singapore.

 

Despite this cooling period, there are still foreign buyers coming in to invest in properties.

 

Following the opening of Li Ka-shing's office in Singapore to invest in a family office, a new report by real estate firm OrangeTee&Tie shows that the total number of foreign property transactions in Singapore in 2022 is already close to pre-epidemic levels.

 

The influx of foreign buyers into the Singapore property market has been particularly pronounced in the last decade.

 

While local Singaporean buyers are still the big residential sellers in the current Singapore property market, accounting for about 80% of total transactions, the proportion of foreign buyers buying properties is gradually growing, even up to 35% in some property projects in the central core.

 

In the second quarter of this year, Chinese buyers, including those with permanent resident status, bought a total of 366 private homes, a 106 percent jump from the first quarter.

 

And news of Chinese tycoons sweeping Singapore has also started to emerge, with a Chinese buyer from Fujian buying 20 homes at Canninghill Piers, a luxury residential project in downtown Singapore, at a total cost of more than S$85 million (about RMB 423 million) in late May this year, according to reports.

 

The Global House Price Index report released by international real estate consultancy Knight Frank shows that throughout 2021, Singapore's non-landed private property prices (i.e. private condominiums) rose by 6.1% over the past year, the highest increase in Asia; in the second quarter of this year, Singapore's private property prices rose by 3.5% year-on-year, and the rise has continued for nine quarters.

 

To prevent the property market from overheating, the Singapore government has raised stamp duty three times in the past five years, including an increase from 18% to 34% for foreigners, but instead of lowering their budgets due to the higher tax, foreign buyers have also raised their budgets.

 

In addition, local rentals in Singapore have also been affected by the new crown epidemic, as the construction period of many properties in Singapore has been hampered in the last two years and the time for delivery has been extended, which is one of the reasons for the soaring residential rents in Singapore.

 

According to a report released by SRX, a Singaporean real estate agency, apartment and HDB rent prices in Singapore have continued to rise this year, and as of June, apartment rentals in Singapore have risen for 26 consecutive months, and HDB rentals have increased for 22 consecutive months.

 

Recently in Singapore to rent a room, basically need to grab, many houses are on the way to see the room is booked out, so much so that many landlords began to sit on the price, compare the price that each tenant can pay to decide who to rent to, and even to pick the background of the tenant.

 

It is understood that the current rent for a shared room is above S$2,000 for a single room, around S$3,000-4,000 for a single apartment, and above S$4,000 for a two-room apartment.

 

The Monetary Authority of Singapore's Financial Vulnerability Index, which measures the state of financial stability, showed that local households were in a more vulnerable financial position in the third quarter compared to last year, with the Maturity Risk of debt increasing and the Leverage Risk also rising slightly.

 

According to the annual Financial Stability Assessment report released by MAS on Friday (November 25), Singapore household debt continues to grow, although the year-on-year growth rate has slowed to 3.1 percent in the third quarter of this year after peaking at 7.4 percent in the fourth quarter of 2021, mainly due to the property cooling measures in December last year that slowed the growth of housing demand and mortgage loans.

 

But mortgages are also a major factor pushing up household debt, accounting for 2.7 percentage points of the 3.1 percent increase.

 

Despite the sharp rise in mortgage rates since the beginning of the year, private home prices continued to rise, with an average year-over-year increase of 2.7 percent over the past three quarters, slightly higher than the 2.6 percent average increase in 2021.

 

The MAS said this reflects strong purchasing power amid solid underlying demand and rising wages for residents.

 

Among them, in terms of private residential transactions, the volume of private residential transactions declined in the first quarter of this year after the introduction of cooling measures in December last year, although the volume rebounded in the following quarters due to the relaxation of the related anti-epidemic measures.

 

As of the third quarter of this year, the average transaction volume of private homes fell 28% year-on-year, yet was 10% higher than before the epidemic (2017 to 2019).

 

In addition, MAS said that SORA-linked home loan interest rates are likely to rise further in the future and then gradually stabilize, but will also be significantly higher than the low interest rate levels of the past decade.

 

This also means that households will face higher loan repayments, and the larger the loan size, the larger the increase.

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Singapore property prices are also facing cooling off and flame out
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