Singapore sees multi-million dollar housing rise

Singapore sees multi-million dollar housing rise

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SINGAPORE (Reuters) – Hundreds of public apartments in Singapore, one of the world’s most expensive cities, are selling for more than 1 million Singapore dollars ($716,000), as construction delays linked to the coronavirus lead to a shortage of new units.

At least two units have crossed the million dollar mark, and soaring prices have sparked talk of new government measures to try to cool booming real estate markets.

Southeast Asia’s public housing system – which sells government-built housing units directly to citizens on a 99-year lease – has resulted in more than 80% of Singaporeans owning their own homes, one of the highest rates in the world.

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Many of the units – known as the Housing and Development Board (HDB) apartments – are located near train stations and shopping centers and cater to various social and economic groups.

Since property is transferable to both citizens and permanent residents after five years, a resale market has emerged. Some apartments that were originally purchased for around S$500,000 are now fetching twice that, depending on size and location.

The most expensive resale public apartment – a spacious 122 square meter unit near train stations and schools with a 92-year lease to remain – was sold this year for S$1.418 million.

For decades, Singaporeans have used their HDB apartments to get extra cash by renting them out or reselling them at a profit.

“The multimillion-dollar HDB apartments are here to stay, as there will always be people who want to live in central locations or larger spaces,” said Clarence Long, who brokered the sale of a 113-square-meter public apartment for S$1.4 million in May.

“If you are looking for a similar sized private apartment in the same location, the price could easily reach S$2.5 million,” Long said.

Unlike HDB apartments, condos in Singapore usually have security guards and facilities including swimming pools and gyms.

Most first-time public apartment buyers can apply for government housing grants and loans, making them less vulnerable to rising bank interest rates, and keen to exit a rental market that has also surged amid the pandemic. Read more

“The monthly mortgage for my apartment in HDB is around S$3,400, which is much cheaper because the rent for a similar apartment now would be around S$5,000,” said Rajiv Malhotra, 45, who bought a 94-square-meter public apartment for S$1.08 million. last year.

The government said late last year that the proportion of monthly income used in mortgage payments for three years remained at around 23% on average for public apartment buyers with government loans.

Rising prices

The construction sector in Singapore, which relies heavily on foreign labour, has experienced major disruptions amid the COVID-19 pandemic, with tight supplies of materials also leading to delays.

Analysts expect limited supplies to decline in early 2023.

While the $1 million apartments are still less than 2% of total transactions, 259 standard public apartments were sold for S$1 million or more last year, official data shows, and there were already about 230 by August of this year. .

Those who find the resale market too expensive can seek to purchase off-plan public apartments directly from the government, known as HDB Built-To-Order (BTO) public apartments, which typically sell for around S$300,000 to S$700,000.

However, most popular BTO projects are oversubscribed and take about five years to complete construction, pushing many into the resale market.

When contacted by Reuters about any new cooling measures in the pipeline, HDB did not comment but referred to previous government statements.

The Ministry of National Development said last month that the government intends to increase the supply of new BTO apartments to meet demand.

Singapore announced cooling measures in the property markets last December, including an increase in stamp duties and tightening loan limits, and transaction volumes saw some decline. Read more

“There is a possibility that the government will consider another round of cooling measures given the price hikes in both the public and private residential markets,” said Kristen Sun, senior vice president of research and analytics at OrangeTee & Tie.

“But it won’t be easy…because he is a willing seller and a willing buyer,” Sun added.

(1 dollar = 1.3961 Singapore dollars)

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Reporting by Chin Lin in Singapore; Edit Lincoln Fest

Our Standards: Thomson Reuters Trust Principles.

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