Homebuyers should prepare for continued increases in real estate costs.
SINGAPORE — If you’re planning to purchase property this year, be ready to spend more than before. Despite price hikes over the past two years and government measures aimed at cooling the market, real estate agents and industry analysts anticipate that property prices will keep climbing in 2022.
According to the head of research at Knight Frank Singapore, private residential prices could rise between one and three percent this year. Ong Teck Hui, Senior Director of Research and Consultancy at JLL Singapore, offers a slightly more optimistic estimate of two to four percent. Notably, these projections are significantly lower than in 2021, when private home prices surged by over ten percent.
In the resale market for public housing flats, prices rose dramatically by 12.7 percent, as reported by the Housing and Development Board on February 6. Edgeprop CEO Bernard Tong noted that resale HDB prices remained relatively low until the circuit breaker period.
To address the escalating prices in both the private and public residential markets, new measures were introduced at the end of 2021. These included increased taxes on second and subsequent properties, as well as stricter loan limits. CNBC reports that these measures have primarily deterred foreign buyers rather than Singaporeans and permanent residents.
Foreign purchasers now face a higher additional buyer’s stamp duty (ABSD), which has risen from 20 percent to 30 percent. This tax is determined by the buyer’s residency status, citizenship, and the number of residential properties owned. Additionally, property developers are now subject to a 35 percent ABSD under the new regulations.
Rental rates have also been on the rise in recent years, driven by increased demand for rental properties. This demand has been fueled by young couples seeking independence without being ready to buy their first home. With the construction sector still recovering from pandemic-related disruptions for the third consecutive year, 2022 is likely to remain a “landlord’s market.”
As travel restrictions ease further, rental demand could continue to grow throughout the year. Ong Teck Hui predicts that rents may increase by five to seven percent this year.
For those looking to buy property, Lee Sze Teck, Senior Director of Research at Huttons Asia, advises that the next few months could be the optimal time to act, suggesting buyers should move quickly to secure a deal.
