Singapore is known for its thriving property market, with prices soaring in recent years. However, with the ongoing economic uncertainty and newly-implemented government policies, many are wondering if private property prices will drop in Singapore.
Firstly, it is important to understand that the property market in Singapore is heavily influenced by government policies. The government has implemented measures such as cooling measures to control property prices, and the recent pandemic and surge in rental prices has prompted further government interventions to support the economy.
Why are property prices so high in Singapore?
There are several reasons that contribute to Singapore’s expensive property prices.
Firstly, Singapore is a small island nation with a limited land supply, which means that land is a valuable and finite resource. The government strictly controls the release of land for development, and this scarcity has contributed to the high cost of property.
Secondly, Singapore has a strong economy and political stability, making it an attractive destination for foreign investors. The demand for property from foreign buyers has increased, particularly for high-end properties, which has driven up prices.
Additionally, the government has implemented policies to encourage home ownership, such as the Central Provident Fund (CPF) scheme, which allows Singaporeans to use their savings to purchase property. This has increased demand for housing and further driven up prices.
Another factor contributing to high property prices is the presence of various amenities and infrastructure, such as world-class education and healthcare systems, efficient public transportation, and excellent urban planning. These factors make Singapore an attractive location for both locals and foreigners, driving up demand for properties in prime locations.
A combination of limited land supply, high demand from both local and foreign buyers, government policies, and the presence of excellent amenities and infrastructure has contributed to Singapore’s property prices.
Will private property price drop in Singapore?
In 2022, it was reported that private residential property prices rose by 8.6%, a slight decrease from the 10.6% increase observed in 2021. While experts say that private property price in Singapore will continue to grow in 2023, they have also noted that it will be a much slower growth as compared to previous years.
There are several reasons for the slower growth of property prices in Singapore.
Firstly, in September 2022, the Singapore government introduced several cooling measures to control property prices. These cooling measures include raising interest rates for bank and HDB housing loans, lower loan-to-value limit for HDB housing loans, as well as a 15-month wait for private property owners buying non-subsidised HDB resale flats. These measures are currently in effect and have already seen a slight decrease in demand for property in Singapore.
Secondly, the supply and demand factors could also affect property prices in Singapore. It is projected that the number of completed private homes with temporary occupation permits may reach a peak of 18,234 units (excluding ECs) in 2023, the highest in seven years. With the increase in the number of new private properties reaching TOP this year, this could lead to a drop in prices.
Thinking of buying private property in Singapore? Read more on how much salary you need to buy a condo in Singapore.