Singapore Property Is Unaffordable, Six Out of 10 People Say

City-state’s real estate market defies gravity, fueling angst

Rising rates are having a limited impact on market: analyst

By Low De Wei

September 14, 2022

Singapore is defying a global property downturn, fueling concerns about affordability within the city-state.

Nearly six in 10 people who want to rent or buy said they find property becoming more unaffordable, according to a poll of 790 respondents conducted in July by 99 Group, which operates online home rental portals.

The price jumps are fueled by a shortage in supply due to construction setbacks during the Covid-19 pandemic, and demand spikes from people looking for upgrades and an influx of well-to-do foreigners. Buyers are brushing aside concerns about rising interest rates that have dented property markets from Australia to New Zealand.

“Interest rate hikes do not seem to have a significant impact on new home sales” in Singapore, said Christine Sun, senior vice-president of research & analytics at OrangeTee & Tie Pte, a local real estate agency. Property prices, she added, are “more supply-driven rather than sentiment-driven.”

Authorities are taking notice. The government introduced curbs last year to cool home prices that surged the most in a decade. Officials also announced tax hikes on high-end properties during the annual budget this year, and plan to increase the supply of private homes.

Despite a brief slowdown, residential prices have rebounded and grew at a faster pace than expected in the second quarter, climbing 3.5%.

Wealthy locals and high-earners moving to the city-state are pushing up prices, said Alan Cheong, executive director of research at Savills Plc. Singapore’s rent surged the most among 30 cities globally in the first half, tying with New York. The nation said last month it would try to woo highly paid expats with a new visa.

That’s part of the reason why luxury properties are seeing the most froth. Condominium resale prices rose for 25 consecutive months as of August, according to estimates released Tuesday by SRX, a portal run by 99 Group.

The heat has also spilled into public housing, with some government-subsidized flats fetching price tags of more than S$1 million ($717,000).

The surging prices pose a challenge for the ruling People’s Action Party. Its achievements include the highest public housing rate in the world, with over 80% of the country’s 4 million residents living in government-built homes.

A separate survey in May showed residents are roughly split on the government’s response to housing affordability. About 52% said it was performing “well,” with the rest saying it was doing “badly,” according to the poll of 758 people by Blackbox Research Pte.

— With assistance by Faris Mokhtar, Andrea Tan, and Alex Millson