Deciding to purchase a private property in Singapore can be an intimidating yet exciting endeavor for any individual or family. As one of the most expensive housing markets in the world, understanding how different factors play a role in determining affordability is essential for making an informed decision about where and what you decide to buy. In this blog, we will explore some of these key factors that influence the cost of private properties in Singapore so that you can better understand what goes into finding your perfect home.
1. Population Growth
Private property in Singapore is becoming increasingly unaffordable due to population growth. This has resulted in a greater demand for private housing and with limited land, it has become harder and more expensive to build private property. In fact, private property prices in Singapore have seen an 8.4% increase in 2022 from the year 2021, making private housing out of reach for many first-time buyers in the country. As the city continues to grow, private housing affordability is only projected to worsen unless something is done about it. It is thus of paramount importance to reconcile the issue of population growth in order for residents of Singapore to be able to afford private homes in the future.
2. Land Scarcity
In Singapore, private housing is often unaffordable due to land scarcity. Private property owners may find it increasingly difficult to search for a plot of private land amidst the dense urban environment of approximately six million people with limited space. Furthermore, when private plots become available, often these are snatched up quickly as investors look to turn them into lucrative apartment units – either for rent or for sale. Hence, even though private housing makes up roughly 30% of the reported living space in Singapore, its affordability is hindered due to the lack of land available.
3. Market Dynamics
Private housing prices in Singapore have been extremely volatile for the last few decades due to an ever-changing market dynamic. Most private properties are either bought or leased as part of Singapore’s private housing market system, where property ownership or leasing form a significant portion of investments and income streams. With private property prices continually booming, they can easily become unaffordable for many in Singapore who wish to purchase private property. That being said, market dynamism plays a huge role in determining private housing affordability in any given economy, impacting sellers and buyers alike. Although private properties have witnessed an unprecedented increase in their prices recently, through proper analysis of current market dynamics and conditions, private housing affordability can be improved.
4. Government Policies
Affordability of private property is a major issue impacting many families in Singapore and government policies are an important factor that directly affects this problem. For instance, initiatives such as the Additional Buyer’s Stamp Duty, implemented in 2011, have made private properties more expensive as buyers have to pay an additional amount of up to 25% of their purchase price on top of the normal levy. To offset this, residential properties can be sold at a lower cost thanks to the Seller’s Stamp Duty scheme – but with some caveats. Ultimately, the government plays an influential role in the private housing market by determining policies related to pricing and eligibility of buyers and sellers.
If you’re looking to invest in private property in Singapore, look no further. New Launches Review offers early access to new property developments and impartial, high-quality reviews, as well as insights into private property trends. Trust us to provide you with the information you need, whether it be for cluster housing or condominium launches.