Economics
Singapore surpasses Hong Kong as Asia-Pacific’s most expensive housing market in price and rent
Private residential property in Singapore has surpassed Hong Kong as the most expensive in the Asia-Pacific region in terms of absolute prices, according to a report by the Urban Land Institute (ULI).
Despite the high prices, Singapore is considered more attainable for home ownership compared to other cities in the region.
The report attributes the increase in prices and rent to factors such as immigration, young professionals seeking more space, government measures, limited rental properties, and disruptions caused by COVID-19.
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%.
Economics
Thailand’s household debt reaches record high amid slow economic growth
Thailand’s household debt has surged to a record 606,378 baht per household, driven by slow economic growth and high living costs. A UTCC survey found 71.6% of households struggle to meet repayments. The government is working on measures to alleviate the burden.
Thailand’s household debt has soared to a record high, with many citizens struggling to manage loan repayments due to weak economic growth, declining incomes, and rising living costs, according to a recent survey.
The study, conducted by the University of the Thai Chamber of Commerce (UTCC) in early September, revealed an average household debt of 606,378 baht (S$23,600), marking an 8.4% increase from the previous year. This is the highest level of household debt recorded since the survey began in 2009.
The survey highlighted that 69.9% of this debt is attributed to formal lending, a decrease from 80.2% last year, while informal lending has risen to 30%. This shift is largely due to many individuals reaching their borrowing limits from formal financial institutions, forcing them to seek credit from informal sources such as loan sharks.
The study also noted that a significant number of households are facing difficulties meeting their financial obligations, with monthly debt payments averaging 18,787 baht, up from 16,742 baht the previous year. The delinquency rate stands at 71.6%.
The growing household debt is placing pressure on Thailand’s economy, the second largest in Southeast Asia, which is already grappling with high borrowing costs and sluggish exports amid a slow recovery in China, its main trading partner.
Both the government and the Bank of Thailand have raised concerns over the country’s total household debt, which reached 16.4 trillion baht, or 90.8% of gross domestic product (GDP), at the end of March 2024—one of the highest levels in Asia. The central bank has introduced measures aimed at reducing this ratio to 89% by next year.
For comparison, International Monetary Fund (IMF) data from 2022 shows household debt as a percentage of GDP at 67% in Malaysia and 48.6% in Singapore.
The UTCC survey, which polled 1,300 respondents from 1-7 September, found that the majority had experienced challenges repaying debt over the past year and expected to continue facing difficulties in the coming year.
UTCC President Thanavath Phonvichai expressed concern over the long-standing debt problem, stating that household debt is primarily incurred for daily expenses, housing, vehicles, and business operations, and does not necessarily undermine the overall economy. He added that the situation would improve once the domestic economy returns to strong growth.
In response to the debt crisis, the Federation of Thai Industries has reduced its 2024 target for domestic vehicle sales by 200,000 units to 550,000, citing high household debt and stricter lending conditions as key factors reducing demand.
Finance Minister Pichai Chunhavajira emphasized the urgency of addressing household debt and urged the Bank of Thailand to provide more support to retail borrowers. He also mentioned plans to engage with banks to explore further assistance measures for debtors.
Thailand’s newly appointed Prime Minister, Paetongtarn Shinawatra, has pledged to stimulate the economy immediately.
On Monday, the government announced plans to distribute 145 billion baht to state welfare cardholders starting next week.
This is part of a broader “digital wallet” program aimed at providing financial relief to up to 50 million people, although it now appears much of the support will be disbursed in cash.
AFP
Top rice supplier India bans some exports
India, the world’s largest rice exporter, bans non-basmati white rice exports to ensure domestic availability and tackle rising prices amid global food crises, potentially impacting rice-dependent nations.
MUMBAI, INDIA — The world’s biggest rice exporter India has banned some overseas sales of the grain “with immediate effect”, the government said, in a move that could drive international prices even higher.
Rice is a major world food staple and prices on international markets have soared to decade highs as the world grappled with the Covid pandemic, the war in Ukraine and the impact of the El Nino weather phenomenon on production levels.
India would ban exports of non-basmati white rice — which accounts for around a quarter of its total — the consumer affairs and food ministry said.
The move would “ensure adequate availability” and “allay the rise in prices in the domestic market”, it said in a statement late Thursday.
India accounts for more than 40 percent of all global rice shipments, so the decision could “risk exacerbating food insecurity in countries highly dependent on rice imports”, data analytics firm Gro Intelligence said in a note.
Countries expected to be hit by the ban include African nations, Turkey, Syria, and Pakistan — all of them already struggling with high food-price inflation — the firm added.
Global demand saw Indian exports of non-basmati white rice jump 35 percent year-on-year in the second quarter, the ministry said.
The increase came even after the government banned broken rice shipments and imposed a 20 percent export tax on white rice in September.
India exported 10.3 million tonnes of non-basmati white rice last year and Rabobank senior analyst Oscar Tjakra said alternative suppliers did not have spare capacity to fill the gap.
“Typically the major exporters are Thailand, Vietnam, and to some extent Pakistan and the US,” he told AFP. “They won’t have enough supply of rice to replace these.”
Moscow’s cancellation of the Black Sea grain deal that protected Ukrainian exports has already led to wheat prices creeping up, he pointed out.
“Obviously this will add to inflation around the world because rice can be used as a substitute for wheat.”
Rice prices in India rose 14-15 per cent in the year to March and the government “clearly viewed these as red lines from a domestic food security and inflation point of view”, rating agency Crisil’s research director Pushan Sharma said in a note.
India had already curbed exports of wheat and sugar last year to rein in prices.
— AFP
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