According to a report released by the Urban Redevelopment Authority (URA) on July 26, the private residential property price index rose by 0.9% month-on-month in the second quarter of 2024, lower than the market's forecast of a 1.1% increase, lower than the 1.4% in the previous quarter, and lower than the 2.8% in the fourth quarter of last year.

Although the growth rate is lower than expected, Singapore's house prices have risen for several consecutive quarters, confirming Singapore's title as "one of the most expensive cities in the world". According to the "2024 Global Wealth and Lifestyle Report" released by Julius Baer Group at the end of June, Singapore has become the third most expensive city in the world for private housing. The report said that due to limited land resources and high-density market demand, Singapore's real estate prices are about 70% higher than the global average.

In fact, the Singapore government has implemented a number of measures to manage the housing market, and government actions are the main reason for preventing housing prices from growing too fast. In April 2023, the Singapore government introduced an additional buyer's stamp duty policy, raising the tax rate for foreigners to purchase any residential property in Singapore from 30% to 60%, and the tax rate for physical and trust purchases from 35% to 65%.

Overview of Singapore's real estate market

Singapore's real estate market consists of public housing and private housing. The former is built and managed by the Housing Development Board (HDB) of the Singapore government; the latter includes private apartments, condominiums and independent houses (such as terrace houses and bungalows), which are built by private developers and are relatively expensive.

Over the past decade, the population occupancy rate of public housing in Singapore has been declining. According to data from the Singapore Statistics Bureau, about 81.6% of residents lived in public housing in 2012, a proportion that dropped to 79.0% in 2017, 77.9% in 2022, and another 0.2 percentage points in 2023. According to a survey of 1,000 Singaporean youth aged 18 to 35 conducted last year, 8 out of 10 youths said that owning a private property was one of their life goals.

According to URA data, the median price of private apartments in Singapore exceeded S$1.7 million (about RMB 9.1 million) in June, up more than 30% from four years ago. Data released by HDB on July 1 showed that the resale market price of public housing, where Singaporeans mainly live, has risen for the 17th consecutive quarter.

It is reported that in recent years, the Singapore government has increased land sales to promote the construction of private housing. However, due to government restrictions and increased supply, developers' bidding interest in land has been less than expected, and there have even been cases where no one bids for land.

Is Singapore's real estate market still attractive?

Due to the Singapore government's higher tax rate on foreigners purchasing private homes in Singapore, the Singapore real estate market is currently losing some foreign buyers. Kashif Ansari, co-founder and CEO of Juwai IQI Group, a global real estate technology company, said that Singapore's private housing prices will continue to slow down this year until the Federal Reserve cuts interest rates. He said: "Foreign buyers have always used Singapore's property market as a safe haven, which was the biggest driving force of Singapore's property market, but now the 60% tax has made them turn to other countries, such as Dubai and Japan."

In addition, Singapore's price level has always been among the highest in the world. According to the report of Julius Baer Group, Singapore has been ranked as the city with the highest cost of living in the world for the second consecutive year. In addition to the high cost of buying a house, due to strict vehicle population control measures, Singapore is also the city with the highest cost of buying a car in the world, with prices 155% higher than the global average. At the same time, the price of private medical care in Singapore is 213% higher than the global average. ,

So what is the main reason why Singapore's real estate is still attractive? A robust regulatory environment and geopolitical neutrality in global tensions are the main reasons for high net worth people to invest in Singapore's real estate. According to the second quarter global economic outlook released by KPMG on the 1st, Singapore's GDP growth rate so far this year is 1% to 3%, and it is expected to continue at this growth rate for the rest of the year, which is in line with the expectations of the Singapore government and reflects that Singapore can still maintain steady development in the turbulent world.

Will Singapore house prices continue to rise in the future?

According to a report released by real estate service provider Savills, rents for Grade A office buildings, retail markets, industrial facilities and private residences in Singapore's central business district (CBD) will continue to rise due to strong demand for modern high-specification warehouses and industrial parks, coupled with insufficient supply in the next few years. Some foreign countries are still optimistic about Singapore's industrial properties, data centers and warehouse properties, which do not require additional taxes and have relatively stable returns. Therefore, Singapore's house prices are likely to continue to rise.

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