Real estate market in Singapore is going through hard times
2023.01.03 01:36
Real estate market in Singapore is going through hard times
Budrigannews.com – Except for Singapore, property prices are falling everywhere. Knight Frank’s data for the third quarter indicate that private residential prices in the Asian city-state have increased by 14% year-over-year. That contrasts sharply with major cities like Hong Kong and Sydney, which experienced decreases of 7% and 4% over the same time period.
Real estate in financial centers is being hit hard by rising interest rates and fears of a global recession after years of staggering growth. Analysts at Goldman Sachs predict that home prices in Hong Kong, the world’s least affordable real estate market, could fall by as much as 30% by the end of 2023 from their levels in 2021.
The opposite issue is being dealt with in Singapore. As of 2021, the city-state will have a home ownership rate of nearly 90% thanks to the government’s policies on public housing. Numerous households are looking to upgrade to private residences in light of increases in total employment and average annual real wages of nearly 20% since 2017. However, net new housing has fallen below the 10-year average as a result of Covid-19 disruptions. The Urban Redevelopment Authority reports that 78% of planned private residential units were under construction as of the third quarter, down from 90% in the same period in 2021.
The deficit in construction ought to decrease. However, demand will continue to be strong: As the city’s non-resident population approaches pre-pandemic levels of 1.68 million, foreign talent is returning steadily. Furthermore, wealthy Chinese are increasingly looking for safe havens where they can store their assets away from Beijing’s general prosperity drive. According to Reuters, buyers from the People’s Republic purchased approximately one fifth of the 425 luxury condos sold in Singapore during the first eight months of 2022. China’s gradual reopening may result in additional capital outflows.
That will help protect the city-state from a painful and abrupt change. According to the International Monetary Fund, real GDP growth is expected to slow to 2.3% in 2023, down from 3% the previous year. Still, private home prices are expected to rise by up to 5% in 2023, according to Knight Frank analyst Leonard Tay. The housing boom in Singapore is strong enough to withstand a turbulent year.
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