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.
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.