Before & After Effects of Global Events on Singapore Real Estate

In the latter half of 2021, Singapore’s real estate was growing exponentially. So much so that for 6 consecutive months, property prices kept increasing. But since then a lot has changed due to recent global events.

• Global uncertainties affecting Singapore’s housing market in 2022
• How have these global events affected the housing market in Singapore?
• Luxury Properties
• Landed homes
• What type of landed homes was most affected?
• Private apartments and condominiums
• Who is most affected by the recent global events: Locals or Foreigners?
• Which nationality are most keen on Singapore real estate?
• Should you buy real estate now or wait?

A new set of cooling measures was introduced by the Singapore government on Dec 15, 2021.

Additional Buyer’s Stamp Duty (ABSD) for developers has increased from 30% to 40%. Fore foreigners, it has increased from 20% to 30%.

Total Debt Servicing Ratio (TDSR) tightened from 60% to 55%.

HDB loan limit lowered from to 85% of the property’s purchase price.

Singapore’s inflation escalated to 4%, the highest in a decade followed by a probable interest rate hike.

The recent Budget 2022 declared that Singapore property taxes will almost double in 2024 compared to 2022.

To know how it will impact the related parties, read How much will property tax increase cost homebuyers and property investors in 2022 vs 2024?

Russia-Ukraine invasion on Feb 24, 2022, pushed up crude oil prices by more than $100.

“If an all-out war takes place, Singapore’s inflation could climb up to more than 5%,” says Chua Hak Bin, Maybank Kim Eng economist.

On top of it, the oil price shock could drive Singapore’s growth to below 1% which grew at a healthy rate of 7.6% in 2021. 

On the bright side, Singapore’s borders are reopening from 1 April 2022. This will open the gate for foreign buyers to invest in Singapore’s real estate with more flexibility.

All these manifest into a different market condition now.

How have these global events affected the housing market in Singapore?

Due to recent global events, Singapore real estate has drastically changed from quarter 4 of 2021 to Feb 2022. In this segment, we will highlight which part of the property was affected and to what length. We would also shed some light on who are the most affected parties and what can be their next move to salvage their assets and utilize them for the best outcome.

Luxury Properties

Luxury apartments and condominiums are one of the most sought after properties in Singapore. Foreign buyers and ultra-high net worths are the main target group of such houses. Large spacious units in posh locations serve them a comfortable lifestyle to live with their family and even to pass on for generations.

Looking at the chart below, you can notice how the demand for luxury units increased in quarter 4 of 2021 even amid the pandemic. But the transactions saw a sharp decline in Dec 2021, possibly due to the recent cooling measures among other factors. Combined with inflation and property tax hike and spark in energy price, this segment of houses’ transaction dropped further below, twenty-nine, their lowest figure in the last 6 months.

Landed homes

Locals who can afford to buy homes with more than $5 million and intend to own only one property usually goes for landed homes. It gives them a perfect avenue to own and live with their family. Besides, they can get a good price on them if sold or rented.

Similar to luxury units, landed homes transactions also saw an inspiring transaction volume from Oct to Nov 2021. However, after the global events have been dished out in addition to local measures such as tax and cooling measures, their transactions also slipped gradually. From the highest peak of Nov 2021 at 86, the transactions halved to 43 in just 3 months.

What type of landed homes was most affected?

The chart below will give you a clear picture of how many transactions occurred for terrace houses, semi-detached houses and detached houses. 

• Detached houses saw the most drastic fall in sales since the last quarter of 2021, falling by more than 50% of transactions.
• Semi-detached houses come next which had steady sales on Oct-Nov 2021. In Jan 2022, it even saw a dramatic peak in transactions. But the peak was gone as quick as it came as, in a mere 1 month, this segment of house sales fell by 67%, hitting the lowest at Feb 2022.
• The sale of terrace houses dropped by 50% from quarter 4 of 2021 till Feb 2022. However, among the 3 categories of landed homes, terrace houses had the most transactions even at their lowest. 

Private apartments and condominiums

According to the Ministry of National Development (MND), private housing prices have increased by nine per cent from quarter 1 of 2020 to quarter 4 of 2021. HDB resale flats also saw a 15% rise in 2021 after a consecutive decline for the past 6 years.

Private apartments are the mass market’s preferred choice. Whereas executive condos are basically public housing, one grade upper than HDB. Both private apartments and executive condominiums took a larger hit due to recent global events. 

Same as the previous 2 property types, their transactions were at a peak in Nov 2021 but saw a steep decline since Dec 2021. From quarter 4 of 2021 to Feb 2022, these portions of Singapore’s real estate transactions dropped by half. 

This proves that the concoction of recent inflation, interest and tax hike along with global uncertainties dampened the mass buyers’ sentiment. They would rather hold the liquid cash or savings rather than lock it in a capital appreciating investment.

Who is most affected by the recent global events: Locals or Foreigners?

Both groups of buyers have dropped since the beginning of October 2021 as each global event took place. However, compared to the two, Singaporean buyers dropped by 53% whereas foreign buyers dropped by 36%, which is 17% less than local buyers. 

This means local buyers were more affected by the recent occurrences. While inflation decreased their purchasing power, the upcoming tax hike and global uncertainties due to war made them warier to buy real estate. And despite the increase in high property tax and cooling measures, foreign investors are still coming in. Plus, with the borders reopening in less than a week, on 1 April 2022, foreigners can now come into Singapore to further expand their real estate investment.

Which nationality are most keen on Singapore real estate?

Now that it has been established that foreign buyers are relatively more attracted to Singapore real estate right now, who are the buyers still attracted to our properties? 

Looking at the monthly data from quarter 4 of 2021 to Feb 2022, the 3 top countries with the highest buyers are

• China
• Malaysia
• India

Out of these 3 countries, Malaysian buyers dropped the most at 67%, followed by China buyers at 59% with the least affected of the group being India with just a 20% decline in sales transactions. 

However, when everyone was curbing their property purchase, there is an unspecified group of people whose purchase volume increased contrary to others. It seems the group, which had only 45 transactions on Oct 2021, increased to 107 transactions by Feb 2022. 

This means buyers from this unspecified group increased by 138% within this duration.

Who are they?

This group of buyers are those who are paying in cash. They have hot money in their pocket so they are probably not taking loans. Therefore, no official data could not be captured hence they remained unspecified.

Transactions by nationalities:

Looking at the dropping sales figure, you might wonder whether to buy real estate now or wait? 

Well with the recent global events, it is sure that the world will never be the same again. The pandemic has changed us forever. And now with invasions like Russia-Ukraine, we are entering a very challenging phase of the decade. 

But this is also the best time to invest for those who know how to work the situation in their favour! 

You need an expert at your side to guide you through the undervalued gems that could give you the edge in this critical time. 

My forte is on Singapore luxury units and commercial real estate. Having worked for decades in the industry, I have tackled some interesting projects that turned from slums into money-making assets for my clients. 

My next segment will be on hacks you should know before investing in a Singapore shophouse.

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