Why are Singapore property prices rising in this COVID-19 climate?

With property prices rising across the board for resale HDB flats, condominiums, and landed properties in Singapore, it is a rough time for those looking to buy a new home now.

Let’s take a look at the current trends and figure out why are Singapore property prices rising in this COVID-19 climate.

Trend for resale HDB flat prices

The Resale Price Index (RPI) of resale HDB flats increased by 3 per cent in Q2 2021, according to data from the Housing Development Board (HDB).

The RPI is an index used to compare the overall price movements of HDB flats’ resale prices.

Meanwhile, resale transactions fell by 6.8%, from 7,581 transactions in Q1 2021 to 7,063 transactions in Q2 2021. Compared to Q2 2020, however, resale transactions in Q2 2021 were 106.2% higher, mainly due to the circuit breaker measures implemented from 7 April to 1 June 2020.

Trend for private property prices

As for private residential properties across Singapore, prices increased by 0.8 per cent in Q2 2021, according to the Urban Redevelopment Authority (URA). The increase in demand is much slower than the previous 3.3 per cent in the last quarter.

Why are resale HDB flats, condominiums, and landed properties prices increasing?

There are a few possible reasons for the upward trend of both resale HDB flats and private property prices. Some of them include:

• Optimistic property market outlook;

• Delayed and oversubscribed Build-To-Order (BTOs) flats; and

• Increase in private property prices

1. Optimistic property market outlook in Singapore

Singapore is largely successful in tackling the COVID-19 situation on its shores and life is slowly returning back to normal.

Owning a property in Singapore is extremely popular and real estate has always been seen by many Singaporeans as capital assets.

Foreign buyers will also gradually return as Singapore seeks to lift travel restrictions and open up its borders. They too continue to view Singapore as a safe investment destination due to the political stability, transparency, safety, and ease of doing business here.

All in all, positive real estate sentiments coupled with the government’s relaxed measures have led to a more optimistic outlook in the property market.

2. Delayed and oversubscribed Build-To-Order (BTO) flats

Due to their affordable prices and controlled supply, BTO flats are typically oversubscribed, with an average of more than 5 applicants vying for 1 BTO unit during each launch.

Coupled with luck of the draw, many individuals may not be able to successfully ballot for their desired units and turn to resale HDB flats instead.

The COVID-19 pandemic has also sent rippling effects across all the industries across Singapore, including the construction industry. With a delay in these BTO flats, many more couples are now forced to seek their housing in the secondary market.

3. Increase in private property prices in Singapore

The greater need for more personal space has led to the growing demand for landed houses and condominiums. With this surge in demand, some buyers may no longer comfortably afford the monthly mortgages and be priced out of the market. They will then turn to the resale HDB flat market, which in turn increases the prices there.

What does this mean for current property buyers in Singapore?

With interlinking demand and supply factors that affect each other, all the property prices are rising across the board for resale HDB flats, condominiums, and landed properties in Singapore. However, for buyers who are worried, this is not as big of a cause for concern as you may think.

It has been shown that the government is not afraid to step in with cooling measures if the market gets too unstable. Some past property curbs include the Additional Buyer’s Stamp Duty (ABSD), Loan-To-Value (LTV) limit, Total Debt Servicing Ratio (TDSR), and Mortgage Servicing Ratio (MSR).

Read: Important Home Loan Factors to Consider: Are you ready to commit to a home loan in Singapore?

Also if you’re buying resale flats, there are a range of grants by HDB available for eligible applicants. Buyers of private property can make use of the funds in their Central Provident Funds (CPF) to help defray the expenses.

Buying a property is not hard with the right loan advisor

While buying a property in Singapore is not a decision to be taken lightly, it is made much easier if you have the correct loan advisor. At Mortgage Consultancy, our loan advisors can give you the best rates and packages of home loans across 16 banks in Singapore. Contact us today at +65 8556 5271 to get the most suitable loan according to your needs. Free consultation and application services are provided.