15th February to 21st February 2022
Singapore has unveiled “major enhancements” to its tax regime, which include higher property taxes. The Housing and Development Board (HDB) launched 3,953 flats under the February 2022 Build-to-Order (BTO) exercise, including 398 units in Kallang/Whampoa under the Prime Location Public Housing (PLH) model.
1) Budget 2022: Property tax rates to increase from 2023
Finance Minister Lawrence Wong, in his Budget 2022 speech, announced “major enhancements” to the city-state’s tax regime, which include imposing higher property taxes that will be rolled out in two phases in the next two years, reported Channel News Asia.
The property tax rate for non-owner occupied residential properties, including investment properties, will be raised from 10% to 20% presently; to 11% to 27% in 2023; and 12% to 36% in 2024.
Tax rates for owner-occupied residential properties with annual values of over $30,000 will also be increased. The taxation rate currently ranges from 4% to 16% beyond the first $8,000 of a property’s annual value. By 2023, the taxation range will stand at 5% to 23% beyond the first $30,000 valuation and at 6% to 32% in 2024.
Once fully implemented, the changes to the property tax will raise the city-state’s property tax revenue by around $380 million per year.
Dr. Tan Tee Khoon, Country Manager, PropertyGuru Singapore, noted that individuals who belong to the wealthier demographic will be impacted the most by the increased property tax rates for non-owner occupied residential properties, as taxes get progressively heavier with the increase in the annual value of such properties.
“The average Singaporean homeowner who owns a single property which they live in is unaffected by these changes. However, those who own luxury homes and/or multiple properties will definitely feel the pinch.
The example cited is telling. Private property prices and rentals (which affect annual values) have risen significantly in the past year, and as Minister Wong said, a large non-owner-occupied detached house with an annual value of $150,000 will see a property tax bill of $43,000 per year. Coming so soon after the Additional Buyer’s Stamp Duty (ABSD) hike announced in December, this is another large blow to property investors.
A possible impact on the market is an increase in rents if property owners try to pass on the additional costs to the tenants, but this will only affect a niche group of landlords owning properties with rents above $10,000 per month. The sales of luxury properties are unlikely to be affected as these tend to be purchased as trophy assets whereby the buyers are more focused on capital appreciation than just rental yield.”
2) HDB launches 3,953 flats, including Kallang/Whampoa project under prime location model
King George’s Heights, the Feb 2022 Kallang/Whampoa project, has an estimated waiting time of 59 months. Source: HDB
The Housing and Development Board (HDB) has launched 3,953 flats under the HDB BTO February 2022 exercise, including 398 units in Kallang/Whampoa under the PLH model.
The flats are spread across four HDB estates in Geylang, Tengah, Kallang/Whampoa and Yishun.
The second project to be launched under the PLH model, King George’s Heights in Kallang/Whampoa is expected to attract strong demand due to its lower median pricing compared to nearby BTO flats, reported The Business Times.
Orange Tee & Tie’s Senior Vice-President of Research and Analytics Christine Sun noted that Kallang/Whampoa four-room flats at King George’s Heights are priced from $488,000 to $675,000, with median prices at $581,500. Comparatively, four-room flats at Kempas Residences from the May 2019 Kallang/Whampoa HDB BTO exercise were sold from $562,000 to $674,000 in 2019, or median prices at $618,000.
Sun said the lower pricing may be to compensate for the longer Minimum Occupation Period (MOP) since PLH flats are subject to a 10-year MOP as well as stringent selling and buying restrictions.
As expected, there is much interest in King George’s Heights, the Kallang/Whampoa Feb 2022 BTO launch. However, the Dakota Crest Geylang Feb 2022 BTO project is likely to come out as the popular launch of this exercise.
As of 22 February 2022, 11am, the overall application rate for 3-room and 4-room flats for Dakota Crest is 7.6 and 21.8; and for King George’s Heights, the overall application rate for 3-room and 4-room flats is 4.8 and 13.8.
3) New private home sales up in January despite fewer launches
Despite fewer launches, Singapore saw new private home sales, excluding executive condominiums (ECs), increase 3.5% month-on-month to 673 units in January, reported Channel News Asia citing Urban Redevelopment Authority (URA) data.
Lee Sze Teck, Senior Director for Research at Huttons Asia, noted that only two projects were launched last month – Ikigai and Belgravia Ace.
Including ECs, new home sales grew 0.8% to 725 units in January, from the previous month’s 719 units, said OrangeTee & Tie’s Senior Vice President of Research and Analytics Christine Sun.
On an annual basis, new home sales, excluding ECs, plunged 58% from the 1,600 units shifted in January 2021. Lee shared that most of the buyers were first-time buyers, who were unaffected by the cooling measures.
A large number of BTO projects will fulfil their 5-year MOP period in 2022 and 2023. In turn, an influx of HDB upgraders can be expected. These HDB upgraders tend to buy larger HDB flats or new launch entry-level condos for own-stay, sustaining demand for non-landed private property.
4) Ardmore Park unit is most profitable resale transaction in Q4 2021
Ardmore Park is a freehold condominium project in District 10, which received its TOP in 2001.
The 23rd floor unit at luxury condominium project Ardmore Park emerged as the most profitable resale transaction in Q4 2021 as the seller pocketed a sizeable profit of $6.725 million, reported The Business Times.
Spanning 2,885 sq ft, the freehold condominium was sold for $11 million in November last year, way higher compared to the $4.275 million paid for the unit back in 1999. Edmund Tie Research data showed that the selling price worked out to an annualised profit of 4.3%.
Meanwhile, a 1,604 sq ft unit at People’s Park Complex was the leading profit-making transaction by percentage as it was sold for $1.35 million in November, significantly higher than the $350,000 paid by the seller in 2006. The price worked out to an annualised profit of 9.3% and a total profit of around 286%.
“In general, a long holding period, coupled with favourable entry and exit points in the market cycle, remain the key drivers (of) transaction profitability,” said Lam Chern Woon, Senior Director for Research and Consulting at Edmund Tie.
Related article: Is the Yong An Park Unit Worth its 12.5 Million Price Tag: the Most Profitable Deal in Singapore’s Q3 2021 Resale Market
5) Singapore’s young super-rich driving up GCB prices
Despite the COVID-19 pandemic, Knight Frank data showed that the number of Good Class Bungalows (GCBs) sold in 2021 tripled to 60 from 2019, with the young super-rich driving up prices.
Bloomberg reported that Singapore’s younger generation of super-wealthy made their money in not-so-traditional areas and include e-commerce executives, startup founders and people who made their riches in crypto.
Related article: Who Are Buying Good Class Bungalows (GCBs) in Singapore? (2021)
For these young buyers, bungalows are their way of announcing that they have arrived, instead of a method to preserve wealth, said Alan Cheong, Savills Singapore’s Executive Director of Research.
Knight Frank revealed that the average cost of GCBs increased by almost a quarter since 2019 to $1,725 per sq ft in 2021.
In fact, a GCB plot at Nassim Road now cost $85 million, said Singapore Realtors’ Co-Founder and Managing Partner Bruce Lye. This is significantly higher than the $38.8 million selling price of GCBs there in 2019.
Demand for GCBs is likely to remain strong due to three factors. One, most purchase GCBs to live in them. Two, there is limited GCB supply. Three, the prices of GCBs is likely to grow. Hence, those who are in the market to buy a GCB will make a move to purchase if they find a suitable property.
6) Property agent commission unlikely to increase
Real estate executives do not expect the increase in ABSD for developers to push up property agents’ commission rates, reported The Business Times citing a survey by the National University of Singapore Real Estate (NUS+RE).
Related article: Being a Property Agent in Singapore: 4 Surprising Things You Might Not Know
For its Q4 2021 survey, NUS+RE polled 42 senior executives in Singapore’s property sector, which include 22 developers. Over 50% of the respondents expect commissions for new private home sales to remain unchanged after the ABSD rates for developers was increased to 35%, while 41% expect a hike in commission rates.
Meanwhile, more than 80% of the respondents see commissions in the resale market for private homes and Housing and Development Board (HDB) flats remaining stable.
Institute of Real Estate and Urban Studies (IREUS) Deputy Director Lee Nai Jia noted that while the latest curbs may compel developers to increase agent commissions, the limited supply of new launches may offset some of the pressure.
“Separately, sellers in the resale market will face less pressure, as individual owners do not face the deadlines that affect developers,” he said.
7) Buy-to-let investors may prefer to wait-and-see
While a study in Canada’s housing market showed that an increase in transaction prices resulted to a hike in buy-to-let transactions by investors and lesser acquisitions for owner-occupation, partly as more people opt to rent to avoid the higher transaction taxes, such scenario is unlikely to happen in Singapore, reported The Business Times.
This comes as many people still prefer to have their own home rather than rent, said Lee Nai Jia, deputy director at the NUS Institute of Real Estate and Urban Studies.
He believes that buy-to-let investors will prefer to wait on the sidelines for now and watch for any price declines in view of the new curbs, before deciding whether to enter the market.
Moreover, rental yields for private homes in Singapore “are very low to begin with”, said Lee.
“To be honest, we are unsure why anyone will be buying in today’s market for rental returns of less than 2% per annum for freehold properties in Districts 9, 10 and 11,” said Christine Yu, CEO of International Property Advisor.
Typically, investors tend to favour launches in the prime district and the Core Central Region (CCR) when buying an investment property. According to the PropertyGuru Singapore Property Market Report Q1 2022 – Powered by PropertyGuru DataSense, Districts 1 and 6 were in the top 5 best-performing districts by rental yield for Q4 2021.
8) About 2,200 construction companies ceased operations in 2021
About 2,200 construction companies have ceased operations last year, which is comparable to the average number of companies that wound up annually from 2018 to 2020, said the Ministry of National Development (MND) in Parliament.
Specifically, 2,187 companies ceased operations in 2018, 2,347 in 2019 and 2,027 in 2020.
MND noted that the various support measures put in place by the government, including those under the COVID-19 (Temporary Measures) Act (COTMA), have helped the construction industry tide through the pandemic.
In fact, the ministry saw “encouraging signs of the sector’s recovery”.
“Based on project progress payments made at the industry level, the current level of construction output is close to pre-COVID levels. This indicates that construction works are progressing at a steady state,” it said.
“As such, barring any unforeseen circumstances such as a severe industry-wide disruption to construction works caused by COVID-19, the reliefs under COTMA Part 2 and Part 8B will end on 28 February 2022.”
The construction sector was hit hard in 2021 due to the COVID-19 pandemic. BTO supply was disrupted and completion deadlines were extended. Notably, Greatearth Corporation and Greatearth Construction – the main contractors for BTO projects Senja Ridges, Senja Heights, Sky Vista @ Bukit Batok, Marsiling Grove, and West Coast Parkview – went bust.
9) HDB receives 10,240 requests for rental flats in 2021
The Housing and Development Board (HDB) has received 10,240 requests for rental flats in 2021, of which 32% or 3,230 approved, revealed The Ministry of National Development (MND) in Parliament.
Related article: Parenthood Provisional Housing Scheme (PPHS): BTO Delayed? Here’s How to Apply for Interim Housing
Currently, there are 1,800 approved applicants who are awaiting allocation of a rental flat, noted the ministry, adding that the average waiting time is less than a year.
“While the total number of vacant rental flats exceeds the total number of approved applicants, a majority of the vacant rental flats need to be spruced up before they can be let out,” said MND.
It explained that manpower shortages had resulted in slightly longer waiting times for flats to be spruced up. The ministry assured that HDB has taken steps to speed up sprucing works “such as engaging more contractors to complete the works, and to facilitate key collections as quickly as possible”.
Looking at the data from the PropertyGuru Singapore Property Market Report Q1 2022, there has been a surge in price and demand for the HDB rental market. Aside from those affected by BTO construction delays, single millennials and unmarried couples are also driving demand by moving out of their family homes due to a lack of space and privacy.
Browse all available properties for rent on PropertyGuru.
10) Resorts World Sentosa to offer Minions-themed zone, expand SEA Aquarium
Resorts World Sentosa (RWS) announced that it will feature a new highly immersive Minions-themed zone at Universal Studios Singapore as well as an oceanarium that is significantly bigger than the current SEA Aquarium, reported Channel News Asia.
It noted that the upgraded attractions “will form two key components of RWS 2.0, and are envisioned to become Singapore’s new tourism icons and purpose of visits”.
Aside from these, the resort also revealed plans to refurbish its convention centre as well as three of its hotels – Festive Hotels, Hotel Michael and Hard Rock Hotel Singapore.
“Together with other refurbishment works, construction will commence with about $400 million to be spent as project investment in 2022,” it said, adding that construction and renovation works will start in Q2 2022.
Looking for a property in Singapore? Visit PropertyGuru’s Listings, Project Reviews and Guides.
Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: cheryl@propertyguru.com.sg.
