11th January to 17th January
After a robust performance in 2021, the Good Class Bungalow (GCB) market is expected to see a drop in sales volume this year. On the other hand, the property auction market is forecasted to register a hike in listings, although the success rate is expected to decline.
1. GCB sales volume to ease in 2022, but prices expected to remain firm
Market watchers expect the sales volume for Good Class Bungalows (GCBs) to ease this year as much of the supply has been taken off the market after the strong sales momentum registered between Q4 2020 and Q3 2021, reported The Business Times (BT).
Nonetheless, GCB prices are still expected to increase, albeit at a slower pace, amid the strong demand for such properties. Newsman Realty Managing Director KH Tan sees GCB prices rising by at least 10% in the next 12 months.
“Most sellers have strong holding power and are not in a rush to sell. They will consider selling only if they receive offers at current pricing levels or higher,” said List Sotheby’s International Realty’s Senior Associate Vice-President Steve Tay, as quoted by BT.
2021 was a year where we saw an uptick in the number of GCBs that changed hands, with a string of high-profile transactions made by several tech CEOs and their families –most purchase GCBs to live in them. With the limited GCB supply and the likelihood of growing prices, those who intend to buy GCBs are likely to make a purchase should they find a suitable property, keeping demand strong.
2. Auction listings to increase amid rising interest rates
More properties are expected to be listed for auction this year as the extended credit support measures by the government end, and interest rates creep up.
However, the auction success rate could ease from the 4.8% success rate registered in 2021, with properties taking longer to sell, reported The Business Times citing Lee Nai Jia, Deputy Director of the Institute of Real Estate and Urban Studies at the National University of Singapore.
Knight Frank data showed that auction listings, including repeat listings but excluding properties sold outside of auction, rose 35.4% year-on-year to 670 in 2021.
Interest rates are likely to rise in 2022 gradually. Amid increasing mortgage rates, MAS has warned Singapore households about growing mortgage debt. This may dampen interest among potential buyers looking to purchase investment property as they look to exercise financial prudence.
3. Non-landed private home sales jump 57.4% in 2021
Singapore saw transaction volume for non-landed private homes, excluding executive condominiums (ECs), increase 57.4% to 28,795 units in 2021, despite recurring flareups of COVID-19 variants and changing restrictions, revealed Knight Frank in a report.
The hike comes even as transaction volume for Q4 2021 declined 20.1% to 6,375 units from the previous quarter.
Meanwhile, Cushman & Wakefield revealed that Singapore’s real estate market attracted almost $26.2 billion of investment sales in 2021, up 10.4% from the previous year, reported Singapore Business Review. On a quarterly basis, investment volume moderated to about $7.4 billion in Q4 2021, with the private residential market accounting for 38% of total investment sales.
Last year, more than 20,000 HDB flats fulfilled their Minimum Occupation Period (MOP). Consequently, a significant number of HDB upgraders sold their homes, buying either larger HDB flats non-landed private properties. With more than 31,000 HDB flats set to fulfil their MOP in 2022, demand is likely to persist, especially for entry-level, new launch projects.
4. Waiting times of 3 to 5 years for BTO projects launched in past two years
Build-to-Order (BTO) projects that were launched over the past two years will have waiting times of between three to five years, similar to BTO projects launched during pre-pandemic times, said the Ministry of National Development in a written reply to Parliament.
For ongoing projects, it expects flat buyers to be able to move into their new homes within four to five years after booking their flats. This comes after the ministry has taken into account the six to 12 months delays brought about by the pandemic and barring any further unforeseen circumstances.
BTO construction delays have affected young couples and families, pushing many into the HDB resale and rental markets. With the ongoing manpower crunch and increasing material costs, we can only hope that those affected will receive their keys sooner, rather than later.
River Peaks I &II, the Rochor BTO project launched in Nov 2021. Source: HDB
5. No defined boundaries for new prime location HDB flats
The Prime Location Public Housing (PLH) model currently has no defined boundaries, revealed the Ministry of National Development (MND) in a written reply to Parliament.
This comes as HDB and MND will have to consider various factors, such as the project’s market values and locational attributes, “before deciding whether to apply the PLH model to a particular site”.
MND explained that the current intent “is to apply the new model to selected public housing projects in central locations such as the city centre and surrounding areas, including the Greater Southern Waterfront, that have very high market values and would require significant additional subsidies to keep flats affordable”.
The topic of where and when a BTO project under the PLH model will be launched remains a topic of great interest. With details remaining vague, we can only keep guessing where the next PLH flat will be. Perhaps, this will push demand to the city fringe BTO launches and older resale flats as some consider PLH flat alternatives.
6. New, resale HDB flats remain affordable
The Ministry of National Development (MND) has revealed that all new Housing and Development Board (HDB) flats are priced below the market.
In a written reply to Parliament, the ministry explained that in pricing new flats, HDB first establishes their market value by “considering the prices of comparable resale flats nearby as well as the individual attributes of the flats, and prevailing market conditions”.
Related article: HDB Flats in Singapore: BTO Price vs HDB MOP Resale Price 5 Years Later (2021)
HDB then applies a significant subsidy to the assessed market values to ensure that new flats are affordable for first-time buyers. Moreover, eligible first-time buyers can also enjoy up to $80,000 in Enhanced CPF Housing Grant (EHG). The government provides up to $160,000 in housing grants to ensure such flats remain affordable for first-timer families for resale flats. For resale flats, the Government provides up to $160,000 in housing grants to ensure such flats remain affordable for first-timer families.
“With these generous subsidies and grants, both new and resale flats have remained affordable,” said MND.
Housing affordability remains a big worry, particularly among young Singaporeans. As HDB resale prices climb for seven consecutive quarters, and demand for BTO flats continue to grow (as seen by the high application rates), it is certain the Singapore government is keeping a close eye on housing supply and prices.
7. Construction works for Serangoon North, Tavistock stations to start in Q2 2022
Construction of the Serangoon North and Tavistock MRT stations on the upcoming Cross Island Line (CRL) is set to start in the second quarter of this year, revealed the Land Transport Authority (LTA).
This comes after the LTA awarded two civil contracts worth a combined value of $861 million. Hock Lian Seng Infrastructure clinched the contract for the design and construction of Serangoon North station and tunnels, while Sato Kogyo (S) bagged the contract for the design and construction of Tavistock station and tunnels.
The CRL is the eighth MRT line of Singapore, with its first phase expected to commence passenger service in 2030.
Stage 1 of the CRL will see 12 stations built, servicing over 100,000 households in the Loyang, Pasir Ris, Tampines, Ang Mo Kio and Serangoon North area by 2030. In the near future, it would not be a surprise if properties in those areas see considerable price growth, thanks to the convenience of being nearby an MRT station.
8. Woman jailed for buying properties on behalf of three foreigners
A Singaporean woman was sentenced to two weeks’ imprisonment for purchasing three semi-detached properties for three foreigners, with the intent of transferring ownership once they secured Singapore citizenship, reported Channel News Asia.
Song Fanrong was handed the jail term for one count under the Residential Property Act of acquiring a restricted residential property on behalf of a foreigner. Notably, Song had offered to acquire a residential unit at Belgravia Villas for China national Wang Chen.
Two similar charges for the two other properties were considered in the sentencing. This comes as she also acquired two more units at Belgravia Villas for two other foreigners.
Related article: What You Need to Know if You’re Buying Property in Singapore as a Foreigner (2021)
9. Edmund Tie cautiously optimistic of real estate in 2022
Edmund Tie has taken a cautiously optimistic stance on the prospect of the investment, office, industrial, retail and residential real estate markets for this year, with the office segment expected to register a positive net absorption and rental growth.
It noted that prospects for the industrial sector also remain robust and intact, particularly for high-specification logistics and factory spaces. And while businesses become cautious with their space requirements, Edmund Tie expects firm expansions from certain sectors such as electronics, pharmaceuticals, precision engineering and logistics.
With COVID-19 gaining acceptance as an endemic in the community, retail sentiment is predicted to further improve, with the retail sector likely to stabilise this year. Edmund Tie expects price growth to moderate on the residential market following the introduction of the new cooling measures.
10. CBD Grade A office demand increased by more than 8x in 2021
Demand for CBD Grade A office space increased by more than eight times to hit 0.8 million sq ft in 2021, reported Singapore Business Review, citing Cushman & Wakefield.
The hike in demand was attributed to a move towards quality office space, led by the financial and technology sectors. Cushman & Wakefield data showed that these branches accounted for at least 72% of new leases in the CBD last year.
“Resurgent office demand and tight supply are expected to propel CBD Grade A office rents by 4.6% in 2022 alongside expected tightening vacancy rates,” said Wong Xian Yang, Cushman & Wakefield’s Research Head for Singapore.
11. Singapore REITs to continue to recover despite Omicron
Despite the threat of the Omicron variant, UOB KayHian expects Singapore’s real estate investment trusts (REITs) to continue with their recovery, on the back of the city-state’s high vaccination rates and opening of borders, reported Singapore Business Review.
Singapore currently has vaccinated travel lanes (VTL) agreements with 24 countries and the border between Singapore and Malaysia also remains open.
UOB KayHian’s CFA Jonathan Koh expects the reopening of borders and extension of capacity for existing VTLs as well as the introduction of new agreements to resume in 2H 2022. This will also push the hospitality industry’s recovery to 2H 2022.
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Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: cheryl@propertyguru.com.sg.
