Although the global pandemic affected individuals around the world negatively, certain property markets remain in high demand. The overwhelming demand and lack of supply have led to rising prices, and Singapore serves as a good example of how some markets continue to surge. However, before a person can understand this market and where it is going, they must know about past behaviour.
Singapore’s property market started a downward trend in 2013 and remained there for almost four years. It wasn’t until the second quarter of 2017 that it appeared to be on the rebound. Rent and housing prices continued to drop even as the demand for land increased along with its prices. Vacancy rates remained extremely high, leading to rent prices decreasing more. Starting in the first quarter of 2017, transaction volumes started to climb. Many people wanted to reside in new projects, which helped the market improve. Even as the transaction volume numbers recovered, people started buying more and prices began to skyrocket.
Industry experts believe the improvement in Singapore’s economy led to the increase in new units sold during 2017. The country saw growth in its GDP, and the unemployment rate was on the decline. Nevertheless, buyers remained cautious in 2017, as they continued to see high vacancy rates across the country.
The following year, housing prices were on the rise and the increase was significant. Developers wanted more land they could build on, which led to bidding wars that raised the prices of new units when they entered the market. Better economic growth along with higher demand led to rising prices in the housing market. Rentals increased at the same time, a significant change in the market from previous years.
The Stamp Duty
In July 2018, the government announces new policy and tax changes. This led to scepticism among many developers. Housing price increases jumped by more than three percent, which was higher than the government and analysts predicted. To curb this demand and allow for a smooth recovery of the market, the government increased the Additional Buyer’s Stamp Duty or ABSD by five percent. In addition, everyone was subject to a tighter loan-to-value ratio, including first time home buyers.
Developers purchasing land for redevelopment were subject to a 25 percent tax rate. This was an increase of ten percent, and the ABSD rate would apply to citizens and permanent residents purchasing a second home. These individuals would pay 15 percent, while non-permanent citizens and residents were forced to pay an ABSD rate of 20 percent, regardless of whether they were buying a first or second home. What does this all mean for the 2021 property market in the country?
The 2021 Singapore Property Market
Experts say properties in Singapore will remain in high demand in 2021. Part of this demand comes from Korea and China, and Singapore now comes in first in terms of investment prospects according to the Urban Land Institute. While the GDP dropped in the third quarter of 2020, the market and housing prices remained at the highest level since 2013. Nevertheless, some people express concern over the market thanks to the global pandemic.
Some people worry about the long-term effects of the pandemic and high rates of unemployment. While the Singapore government is known for helping locals in times of need, some properties may come up for sale at an incredibly affordable price. Take advantage of any deals and apply for a Singapore home loan with Dollarback Mortgage. Those who act quickly will win in the end.