The Singapore Residential Property Market Outlook 2021

Prices in the Singapore residential property market have been rising between the closing quarter of 2020 and the opening quarter of 2021. Properties viewed as residential are Housing and Development (HDB) flats, Housing and Urban Development Company (HUDC) apartments, condos, bungalows, terraced houses, and cluster houses. 

Trends 

According to the Urban Redevelopment Authority, the first quarter of 2021 showed a price increase for private residential properties in Singapore by 2.1 percent. However, an even steeper increase of 3.3 percent growth in price occurred between the first and second quarters of 2021. As estimates were lower, the property market has responded better than expected for sellers. This is the highest increase since the second quarter of 2018. The upward trend has continued unabated for four quarters in a row. 

Landed properties in Singapore rose by 6.7 percent in the first quarter of 2021, making up for a decline of 1.6 percent in the last quarter of 2020. The increased prices for condominiums coupled with a desire for additional space has made landed properties popular. 

The price of non-landed properties rose by 3 percent in the last quarter of 2020 and by a whopping 6.1 percent in the first quarter of 2021 in the central region (RCR). Prices in surrounding areas (outside central region OCR) did not increase as dramatically – 1.8 percent in the last quarter of 2020 and 1.1 percent in the first quarter of 2021. The core central region (CCR) showed a 3.2 percent raise at the end of 2020, followed by a much more moderate increase of 0.5 percent in the next quarter. 

The good performance of the sellers’ market saw 4,249 properties sold in the last quarter of 2020 increase to 4,519 sales in the first quarter of 2021, up by 6.4 percent. More than half of these were resales versus new properties, with 3,493 units sold by developers.

Reasons for the strong performance of the residential property sector can be attributed to the recovery of foreign investment demand and a high desire to own private residential property locally. Singapore is considered one of the safest countries to live in globally, thereby attracting the foreign market. Despite this, property prices in Singapore remain in the highest three most expensive locations in the world.

Factors Affecting Foreign Investors

Many foreign investors find it suits them to work and live in Singapore. Business policies in the country make it an ideal base for reaching out to the Asia Pacific region.

However, these buyers face additional charges when purchasing a property here. Local buyers pay Buyer’s Stamp Duty (BSD) and a lower Additional Buyer’s Stamp Duty (ABSD) while foreign investors must pay BSD and a much higher ABSD. Both of these items are calculated on the higher the purchase price and the property’s current value. ABSD liability is also determined by whether the purchaser is a private individual or a business, whether or not the buyer is a resident of Singapore, and by how many properties the person or entity currently owns. The Immigration and Checkpoint Authority (ICA) is responsible for granting residency status to persons. 

Foreigners buying a residential property in Singapore were charged 20 percent ABSD in 2018, whereas permanent residents paid 5 percent when purchasing their first home. Costs can be cut by becoming a permanent resident. There are fewer restrictions for foreigners when buying a business property such as an office building than a residential property. Furthermore, certain residential properties can only be purchased by residents, such as Housing and Development Board public flats, bungalows above a certain size, and certain landed properties. Approvals are needed from the Singapore Land Authority. 

Private condominiums are a good option for foreign investors due to zero restrictions. There is no limit on the number of condos that can be purchased. 

Selecting a Property for Purchase

Once the decision has been made to purchase a residential property in Singapore, the buyer can start examining the market for a prospective home. While this is more difficult for the foreign investor, it can be simplified by going through an agency such as PropertyGuru. This company provides a comprehensive question and answer service using AskGuru. Questions range across a multitude of useful subjects such as advice on the choice between two properties for investment purposes and topics such as inheritance and legacy planning. 

There are several steps for buying property in Singapore. Firstly, an affordability test is needed, then a check to see what taxes will be required. Next, available listings can be checked to see what is on the market and an estate agent hired. Finally, apply for a bank loan and make an offer on the desired property. 

The residential market in Singapore is a seller’s market and the trend is set to continue throughout 2021.

Increasing Your Rate of Savings to Invest More

Increasing Your Rate of Savings to Invest More

If you are thinking of investing, but don’t know how to save money to invest, then today we are going to discuss using the money you are already putting aside as savings as capital to earn more.

The rate of your savings is the key when talking about earning interest on your savings. For the first ten years after you start to invest, the rate at which you save will have the biggest impact on your returns. You can overcome any bad investment decisions that you make at first if the amount you save is hefty enough. 

“Try to save something while your salary is small; it’s impossible to save after you begin to earn more.” – Jack Benny

Does that mean you need to worry if you can’t afford to save too much right now? I don’t think so. The important thing to pay attention to, at this stage of your investments, is whether you can increase your savings rate over time. There are a few ways to do that. 

You can dedicate at least half of your raises to saving up for investments, or increase the rate over the period of five to six years, once your income begins increasing. Increasing your savings rate by as little as 5% every year for a period of ten years will result in sizable returns on investments. 

The returns you get in the early stages of investments will not have much impact on the final result. In this stage, you can afford to make a few mistakes and still come out on top as long as your savings rate is maintained.

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” – Robert Kiyosaki

Making small changes to increase the amount you save up requires a lot of meticulous planning. This is why I often suggest keeping a set time aside when you plan your finances. Being clear on what your financial goals are and understanding the incoming and outgoing money flow will help you create a tight budget.

You will learn to identify problem areas that you can work on and also find solutions to tackle those problem areas. This will give you a chance to save more by budgeting and running a tight ship with your expenses.

To save more, initially, you have to live far below your means so that you can maximize your savings rate and the part of your net income that you put toward your savings and investments.

Final Thoughts

People always will tell you that it takes money for you to make money. It is more or less the truth. When it comes to investments, the more money you can put toward it, the more chances you have of generating a great amount of passive income. The same is with businesses, the more you can put into its launch, the greater you have the odds of success. 

This being said, you cannot discount research, learnings, and your planning, but does play an important role. Learn to increase your rate of savings so that you can invest more.