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The Year of the Ox was a bullish for the housing market, with an anticipated 13,118 new residences sold by the conclusion of the year. Even though Covid caused havoc in people’s life, it had little effect on Singapore property values, which increased by 13.8% from 2nd quarter 2020 to 4th quarter 2021. Overall private house prices grew 5% in the fourth quarter of 2021, with overall price increases for the year totaling roughly 10.6%.
Property cooling measures, the government’s recommended cure for a frothy property market, were implemented by the end of 2021. It was applied just before midnight on December 15, throwing a cloud over the Year of the Tiger’s expectations.
Belgravia Ace Sold More Than 90% of Phase 1 on Preview Day
Belgravia Ace, a 107-unit strata landed development, was the first new project to start its sales in 2022, just in time for the Lunar New Year. It was a fortunate sign, as 77 of the 85 units available were picked up, resulting in a selling rate of over 90%. 75 of the 77 units were strata semi-detached homes selling for $4.3 million to $4.6 million, with two terraced properties selling for more than $4 million. (Find out about all of Singapore’s upcoming condo launches in 2022.)
Belgravia Ace was the first new launch of 2022, with 77 of the 85 units available being picked up on January 22, leading to a selling rate of almost 90%.
Buying Trends with the new Cooling Measures
“Strong sales at Belgravia Ace boosted market confidence,” says Lee Sze Teck, research at Huttons. “It demonstrates that Singaporean purchasers still have a demand for larger residences.” He says that many of the buyers were multi-generational families planning to move in together.
The common expectation after the property cooling measures was that consumers would either delay or cut down their house purchases, given the higher additional buyer’s stamp duty (ABSD) of 5% to 15% and the stricter total debt servicing ratio (TDSR), which was decreased to 55 percent from 60 percent.
Property purchasers seemed to have acquired larger apartments and paid higher average psf as well as absolute prices during December 1–15 and December 16–26.
According to Lee, those who purchased larger houses at greater costs are more likely to be “first-time homeowners” who are unaffected by the rising ABSD and are purchasing for their personal use. “Some may have factored in future increases in family size, while others are counting on the continuance of hybrid work and home-based learning trends, necessitating extra room,” he says.
Is there an Opportunity even with the New Cooling Measure?
Most property consultants turn to the past to understand the future. On July 5, 2018, property cooling measures were used for the first time. According to Lee, private home transaction volume has decreased for two consecutive quarters, while prices have decreased by 0.7 percent during the same time period.
From 1Q2019 to 4Q2021, transaction volume and prices rebounded and were once again on an increasing track. According to this calculation, the recent property cooling measures should have a six-month effect. “Transaction activity will restart after the dust has cleared and there is more clarity,” Lee says, “and property values should improve in coming quarters.” Check the latest property launches for 2022 here.
If history is any indication, Lee feels “the next six months give the finest window of opportunity” for property purchasers.
ABSD has not increased for Singaporeans and permanent residents (PRs) purchasing their first home. Foreigners, on the other hand, have seen ABSD rise to 30% from 20% prior. The ABSD has been increased for Singaporeans and PRs purchasing their second, third, and subsequent residences. “The increased ABSD is a wealth tax,” Lee observes. “You may pay a greater ABSD if you’re rich enough to purchase a second or third home.”
Liquidity in Property Market
Much has been said regarding the market’s liquidity. Regardless matter where the money came from, whether it came from the actual economy, the metaverse, or cryptocurrencies, most of it has gone into Singapore’s real estate. “That’s why, despite the cooling measures, people continue to purchase property in Singapore,” Lee explains.
To put things in perspective, Lee refers to the largest discrepancy in over two decades between currency and deposits (cash equivalents) and home loans (see chart, “Currency and deposits vs mortgage loans”). It stands at 2.12 times as of 3Q2021, implying that every dollar of debt is backed by more than $2 in cash.
Property Price Growth Outpace Inflation
Singapore’s economy increased by 7.2 percent in 2021, with GDP expected to rise by 3 to 5 percent in 2022. Positive economic development leads to more employment and a thriving real estate market.
Inflation is a global problem, especially in Singapore, where the latest consumer price index (CPI) showed a 2.3 percent year-on-year rise in 2021. In December, Singapore’s core inflation rate was 2.1 percent, the highest since July 2014. As inflation hits, Singapore’s Monetary Authority tightened monetary policy in an out-of-cycle action on January 25. The CPI all-items inflation rate is expected to be 2.5 percent to 3.5 percent this year.
Property price increase, on the other hand, has outperformed inflation over the last 20 years. While inflation increased by 2.3 percent last year, property prices increased by 10.6 percent (see graph, “Property prices versus inflation”). “That’s why many people believe real estate to be an excellent inflation hedge,” Lee explains.
Unsold Inventory at Record Low
Current inventory of new launches at record low. 2021 will likely conclude with a record low of 14,056 unsold apartments. The last time unsold inventory was this high was in 2Q2017, when there were around 17,000 unsold units.
The government land sale (GLS) initiative might help boost supply. Due of the time lag, if the government increases the number of GLS sites for launch this year, the extra supply would only be available in 2023, according to Lee. “This will not alleviate the supply shortage in 2022,” he argues.
Between 2H2016 and 1H2018 (before to the most recent round of property cooling measures in July 2018), around 4,900 new private housing units were released for sale each year as a result of successful en bloc sales. Each year, GLS sites produced an average of 3,700 new dwellings, increasing the total yearly supply to 8,600 units.
En bloc acquisitions by developers fell after the July 2018 property cooling measures, which increased developers’ ABSD to 25% + 5% non-remissible.
Last year’s surge in collective sale activity was also short-lived, as the current cooling measures saw developers’ ABSD increase by another 10% to 35%, on top of the 5% non-remissible ABSD.
“Developers will have to weigh whether the increased risk of ABSD makes it worthwhile to continue with their acquisition,” Lee adds. “Developers are inclined to pass on a property if the seller’s asking price is unreasonable. This is likely to stifle the market for collective sales.”
Construction costs are projected to remain high in 2022 owing to Covid-related personnel and material limitations, in addition to a lack of supply. Property prices are projected to rise as a result of a shortage of fresh supply and increasing building expenses. Private property prices, on the other hand, are expected to rise by roughly 3% in 2021, compared to 10.6% in 2021, according to Lee.
Property Launches in 2022
| # | Project | Location | Region | Est Units | Tenure | Likely Launch Month |
|---|---|---|---|---|---|---|
| 1 | Belgravia Ace | Belgravia Drive | OCR | 107 | Freehold | Jan 2022 |
| 2 | Royal Hallmark | Haig Lane | RCR | 32 | Freehold | Feb 2022 |
| 3 | Kovan Jewel | Kovan Road | OCR | 34 | Freehold | Feb/Mar 2022 |
| 4 | North Gaia | Yishun Close | OCR | 716 | 99 Years | Feb/Mar 2022 |
| 5 | The Arden | Phoenix Road | OCR | 105 | 99 Years | Feb/Mar 2022 |
| 6 | Piccadilly Grand | Northumberland Road | RCR | 407 | 99 Years | Mar/Apr 2022 |
| 7 | Atlassia | Joo Chiat | RCR | 31 | Freehold | Mar/Apr 2022 |
| 8 | Gems Ville | Geylang Lorong 13 | RCR | 29 | Freehold | 2Q 2022 |
| 9 | Lentor Modern | Lentor Central | OCR | TBA | 99 Years | 2Q/3Q 2022 |
| 10 | Sceneca Residence | Tanah Merah Kechil | OCR | 268 | 99 Years | 2Q/3Q 2022 |
| 11 | Sophia Regency | Sophia Road | CCR | 38 | Freehold | 2Q/3Q 2022 |
| 12 | Evelyn Newton | Evelyn Road | CCR | 25 | Freehold | 2Q/3Q 2022 |
| 13 | 2 Mount Emily Road | Mount Emily Road | CCR | 18 | Freehold | 3Q 2022 |
| 14 | 10A Institution HIll | Institution HIll | CCR | 72 | 999 Years | 3Q 2022 |
| 15 | Ang Mo Kio Avenue 1 | Ang Mo Kio Avenue 1 | OCR | 372 | 99 Years | 2Q/3Q 2022 |
There will be likely 43 new projects this year, with a total supply of 5,509 units. In the first half of 2022, around 14 new projects are expected to be launched. Eight of these are small, freehold projects with less than 40 units.
Soon Lian Realty’s 34-unit Kovan Jewel is one of them. The old Kovan Lodge on Kovan Road, near the MRT station and Heartland Mall, is being redeveloped.
The 32-unit Royal Hallmark on Haig Road in the east is another option. On a 25,054 sq ft freehold plot at the crossroads of Haig Lane and Haig Road, the project will reconstruct ten terraced homes and a cottage. The company behind Royal Hallmark is claimed to be a collaboration led by Terence Goon of Nobel Design, Patrick Kho of Lian Huat Group, and David Ong and Von Lee of 2E Capital.
Atlassia in Joo Chiat, also by specialized developer K16 Development, is also in the east. A row of disused shophouses has been redeveloped. The 34-unit Olloi, which is located in the Joo Chiat neighbourhood, is K16 Development’s first project. Atlassia is a five-story building with 31 flats on the first floor and eight business spaces on the second.
The Arden, a new project by Qingjian Realty, will open shortly at Phoenix Road, off Choa Chu Kang Road. The 105-unit, 99-year leasehold property will be erected on the site of a row of 36 apartments with commercial stores on the first floor that Qingjian bought en bloc for $42.6 million in 2019.
According to Rex Tan, Huttons Asia executive group district director, the Arden is the sole project in the western area in the pipeline for a launch in 1H2022.
Upcoming Highly Sought After EC and Integrated Development
This year’s major projects are those on GLS sites. North Gaia, located on Yishun Avenue 9, is a new development. Sing Holdings has built a 617-unit executive condominium. “ECs are the golden ticket for HDB upgraders and first-timers who are entitled for a $30,000 subsidy and may take advantage of payment deferral programmes.”
Since the introduction of Piermont Grand in July 2019, six EC projects have been launched. Only 93 of the 3,473 units from these projects are still available.
In 2022, North Gaia will be the first EC to launch. The second EC project is scheduled to begin in the second half of 2022. This second EC project, located at Tengah Garden Walk, is a 628-unit development by a joint venture between City Developments Ltd (CDL) and MCL Land.
Aside from the EC at Tengah Garden Walk, CDL and MCL Land will also debut Piccadilly Grand at Northumberland Road, a 99-year leasehold private condo on District 8’s city perimeter. Three 23-story buildings with commercial businesses on the first floor will make up the 407-unit, 99-year leasehold project. The project is close to the MRT station Farrer Park.
MCC Land’s Sceneca Residence in Tanah Merah Kechil, which will feature 268 condominium apartments, is one of the next integrated complexes that is slated to open in 2H20-22.
Far East Organization’s 700-unit development at Jalan Anak Bukit, MCC Land’s 268-unit project at Tanah Merah Kechil, and GuocoLand’s 600-unit project at Lentor Modern are among the major integrated projects set to open in 2H2022.
