According to a recent study conducted by the National University of Singapore, more developers are worried about rising construction costs, with about 88% saying that they are “very concerned” about rising labor prices in the next six months (NUS).
This is higher than the 71% recorded in the first quarter of 2021.
Around 58% were concerned about rising construction material prices, up from 45.8% in Q1 2021.
Professor Sing Tien Foo, director of the Department of Real Estate at NUS Business School, said that this is the first time that respondents have shown such a high degree of worry over building prices since NUS began collecting data.
This is due to the fact that prices are generally constant, he said, adding that it would take some time until border restrictions for migrant labor are removed.
“By then, we will also have to compete with other nations for labor,” he added, according to ST.
According to Ian Teo, President of the Micro Builders Association of Singapore, it may take one to three years for things to return to normal.
Meanwhile, housing demand and prices are expected to rise.
In Q2, about 54 percent of poll respondents expected additional units to be released over the following six months, while 63 percent expected new launch prices to rise.
OrangeTee Director Steven Tan said that demand for private and public homes has been rising, with listings for both new launches and resale apartments being purchased on the same day.
“Buyers are more prepared to spend on larger but older apartments owing to work-from-home requirements,” he added, as reported by ST.
According to OrangeTee statistics, more than 14,000 resale HDB apartments were sold in the first half of 2021. Prices rose by 6% over that time span, leaving them just 2% below their high in Q2 2013.
OrangeTee anticipates overall HDB resales to reach 27,000 to 29,000 units this year, up from 24,748 sold last year and 23,714 moved in 2019. Resale apartment prices are expected to rise from 9% to 11% in 2021.
In the private house market, a total of 8,449 units, including new launches and resale units, were traded in Q2 2021, a 4.3 percent increase from Q1 2021.
Tan predicts that total house prices would rise by 6% to 9% this year.
As a result, the Building and Building Authority (BCA) expects construction demand to be between $23 billion to $28 billion this year, up from a preliminary estimate of $21.3 billion in 2020.
