SINGAPORE — According to a report released by the Urban Land Institute (ULI) on Tuesday (30 May), private residential property in Singapore has surpassed Hong Kong to become the most expensive in the Asia-Pacific region in terms of absolute prices in 2022.
The recently released 2023 Asia Pacific Home Attainability Index report by ULI provides an overview of housing attainability in cities across the Asia Pacific region.
However, despite the high price, Singapore is deemed the most attainable in terms of home ownership, with the median price of Housing Development Board (HDB) units at 4.7 times the median household income.
In contrast, Tier 1 and leading Tier 2 cities in mainland China, Hong Kong SAR, Metro Manila, Metro Cebu, Ho Chi Minh City, and Danang face significant challenges in home attainability, with median home prices ranging from approximately 20 to 35 times median household income.
However, when considering home rentals, most cities have rental costs below 30% of the median household income. Cities in Japan and South Korea have the lowest ratio of monthly rent to income.
Singapore’s private-sector homes most expensive in the region
The report highlights that Singapore’s private sector homes have overtaken Hong Kong SAR as the most expensive in the region, with a median price of US$1.2 million.
Additionally, Singapore’s private sector rental homes are also the most expensive in the region, with a median monthly rent of approximately US$2,600, reflecting a nearly 30% increase.
For the sharp increase in home price and rent, the report cites as key causes:
- A large influx of immigrants into the city-state,
- A growing trend of young professionals to move out of their multi-generational family homes for more space and freedom,
- The government’s new measure that requires homeowners to serve a 15-month wait-out period after the disposal of their private properties before they are eligible to buy a non-subsidised Housing Development Board (HDB) resale flat,
- A relatively limited stock of institutionally or individually-owned rental properties, and
- A reduced new supply of housing in the past few years due to the disruption to the supply chain of building materials and labour due to COVID.
However, the report did highlight that Singapore continues to have the highest homeownership rate of nearly 90%, ” thanks to the government’s decision and consistent commitment to enable its citizens to own homes at reasonable prices from the early years of the country’s independence in the 1960s.”
“In contrast, other gateway cities such as Hong Kong SAR, Shanghai, Tokyo, and Seoul have relatively low homeownership rates, reflecting high home prices and the more migratory nature of the populations in gateway cities.”
David Faulkner, President of ULI Asia Pacific, emphasizes that the report explores the implications of shifts in housing demand and regional competitiveness, considering factors that impact home attainability.
The report covers 45 cities in nine countries, including Australia, China, India, Indonesia, Japan, the Philippines, Singapore, South Korea, and Vietnam. These cities have a combined population of 3.5 billion, representing around 45% of the world’s total population.
The report measures home attainability for both home ownership and rentals based on the median income of households and considers factors such as demographic trends, government policies, urban redevelopment, financing options, government involvement, and the impact of COVID-19 on housing supply.
Skyrocketing hike in housing market
Issues with the rising cost of living are not only faced by expats or permanent residents; most of the burden is also felt by local Singaporeans, who live in Singapore permanently, in their day-to-day lives.
Singapore’s housing and rental prices have risen significantly in recent years, and the government had to implement several cooling measures in December 2021 and September 2022, to moderate demand in the property market.
However, in the first quarter of 2023, property prices showed renewed signs of acceleration amid resilient demand, particularly from locals purchasing homes for owner-occupation and renewed interest from local and foreign investors in the residential property market.
To “promote a sustainable property market” and “prioritise housing for owner-occupation”, Singapore government announced the implementation of increased Additional Buyer’s Stamp Duty (ABSD) rates effective from 27 April.
Foreigners buying any residential property in Singapore will be subjected to a raise of 30% in ABSD at 60%.