5 factors that affect Singapore property prices
Property investment is a popular tool in Singapore to build up your
wealth or in other words, get rich. While Singapore is always facing land
scarcity but that does not mean you are not able to grab a piece of pie from
the share. There are approximately more than 40,000 units of uncompleted
private residential and more than 16,000 units of Housing Development Board
(HDB) that is left unsold in the property market for you to invest in as a
second property. You will be wondering which type of property is better; freehold
vs leasehold or you will ponder if property value will increase in few
years time? We have a quick guide on factors that affect Singapore property
prices.
What affects Singapore property prices?
A good investment when get back more money than you have originally
spent on the investment. We all have heard of this saying before where buy low
sell high and there are some factors that is going to affect the Singapore
property prices.
Location and infrastructure
As a general rule of thumb, improved transport infrastructure especially
can effect property prices especially the location of the MRT stations within
the walking distance from the residential area. Plus, if the MRT stations are
located nearby amenities like shopping malls, good schools or recreational
area, you can be sure that you will be smiling from ear to ear as the property
prices goes up. For instance the recent Downtown
Line 3 that has operated, their MRT stations, property prices around the
stations have definitely gone up.
Property’s condition
When the property’s condition is old, you can be sure that the prices
will be affected. For instance, landed properties that require a load of
maintenance and repairs, hefty amount is needed if there is difficulty to
repair. This is because many buyers will need to go through the hassle wasting
time and money getting repair and still being ambiguous with the price movement
whether it will be going up or down. On the other hand, if you have renovated
your residential unit in a palatable style, you will be sure the price is going
up.
Land tenure
Most of Singapore’s residential property is leasehold and with the most
common lease duration at 99 years. When the lease tenure is reaching the end,
you can expect a sharp drop in the property price. Whereas, freehold properties
tend to retain its value over the time but it comes with a cost, a heavy one,
usually more expensive to purchase compared to leasehold properties. There is
also land tenure which is quite uncommon in the property market, 999 years,
which is as good as freehold.
Interest rates
Though at this moment, Singapore’s interest rate is relatively low. Good
news for potential loan borrowers, it costs less to take out loan when you buy
a home now. As we all know, higher interest rates will discourage people from
buying properties, so be on the watch of property prices as it will drive the
price downwards. However, since year 2013, the interest rates have been
increasing due to inflation over the years
Government policies
Over the years, there are more than 5 cooling measures implemented since
year 2009 and it is to give impact to property prices in the market. Not
upwards but downwards. Property prices have been suppressed ever since. For
instance, Additional
Buyer’s Stamp Duty (ABSD) that was introduced in year 2011 to cool the
residential market and in year 2013 it is then revised upwards. Recently, the
rates are revised upwards again this year. The revised rates are applicable to
Singapore citizen and Singapore Permanent Resident (SPR) that have bought
second residential properties.
Property market situation
The economic condition is always cyclical and there will be times that
the economic is at it’s bullish and there are times it is in recession. You can
expect demand and prices to fall during the recession but it will reverse to
it’s true times during the good times. After the property market crash in year
2007, it went back up again in year 2009 property market is at it’s bullish
condition till the next few years till government had to implement cooling
measures almost every year.
1 comments
I truly like to reading your post. Thank you so much for taking time to share the factors that affect Singapore property prices. Please keep updating us on this topic.
BalasPadam8 St Thomas