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No Slowing Down on the Singapore's Warmed-up Housing Market

May 04, 2021
4

Luxury real ty sales jumped to the highest level since 2017.

House prices in Singapore rose again in the first quarter of 2021, with private homes rising 3.3% over the year, according to Reuters. This is the sharpest increase in almost three years, and it fuels expectations that the government is likely to step in soon to calm the market.

Because of low interest rates, confidence in the long-term security of the property and fear of lost profits, buyers are increasingly acting contrary to the warnings of the government, which urges caution. Therefore, sales are growing, and houses and apartments in Singapore become more and more expensive.

Singapore authorities are closely monitoring property prices to ensure that housing remains affordable for local residents and meets key economic indicators. They began recommending caution late last year, and in April the Senior Minister Tharman Shanmugaratnam warned once again that home buyers should consider the risk of higher interest rates. However, demand continues to grow.

The cost of private realty decreased by 11.6% compared to the peak of 2013. The last time the government tightened restrictions was in 2018 after prices rose by about 9% in a year. Analysts expect a new round of measures to follow soon, as the city-state's post-pandemic economic recovery is uneven and wage growth remains subdued in the short term.

According to the OrangeTee real estate consultants, overseas demand is coming back, helping boost sales of luxury housing to the highest level since the third quarter of 2017. The total volume of transactions in the first quarter almost doubled compared to the last year, reaching the highest in two years.

Further supply cuts are expected due to construction delays due to the pandemic. The number of properties under construction from developers fell by 40% in the first quarter compared to two years earlier. Analysts expect intense competition for land, which may provoke further price increases.