Your search results

Why There’s No Perfect Time to Enter the Market

Posted by Jayson Ang on December 18, 2022

| 0

TLDR

When it comes to property transactions, understanding the factors influencing rising prices is crucial. The pandemic has driven up construction costs significantly, while the Government Land Sale (GLS) programme and Land Betterment Charge (LBC) contribute to higher property prices. Despite these challenges, the G.R.O.W Method offers a strategy for wealth creation through property investment. Stay informed about market trends and opportunities to make informed decisions in the real estate market.

It’s a common belief that the good things in life are worth waiting for. Unfortunately, this isn’t the case with housing. If you’ve kept up with the news, you already know that home prices have been steadily increasing. The URA’s latest report reveals that from Q2 to Q3 of 2022, private home prices rose by 3.8%, and from the start of 2022 to the end of it, the increase was 8.2%.

OUTSIDE CENTRAL REGION (OCR) : New Benchmark Prices

Evidently, private homes in the Outside Core Region (OCR) have excelled in the last quarter with a remarkable 7.5% surge in growth. This tremendous increase was first catalyzed by the launch of AMO Residences in July; an astounding 98% (362 units) of the units were sold on launch day alone, at an impressive median price of $2,113 psf.

The amazing results from the quarter were further bolstered by two successful launches in September – Sky Eden@Bedok and Lentor Modern. Both achieved a high rate of uptake, with 76.6% (or 121 units) of Sky Eden@Bedok being sold at a median price of $2,118 psf and a stunning 84.6% (or 512 units) of Lentor Modern selling at a median price of $2,108 psf.

The three successful launches resulted in an average OCR price-per-square-foot of above $2,000, indicating a widespread acceptance of the concept that paying over $2,000 psf for an OCR project is the new normal. Now, let us explore what factors are contributing to the rise in property prices.

PANDEMIC COSTING EFFECT

The pandemic has caused construction costs to skyrocket, reaching record-high levels in 2022. The construction industry is grappling with higher material costs, a manpower shortage, and inflation, leading to a staggering 30% increase in costs since 2019. There is no doubt that these are the biggest challenges they have ever faced.

The pandemic brought disruption to supply chains, taking its toll on the sector, as these chains raced to fulfill the backlogged demand. To make matters worse, the Russia-Ukraine conflict drove prices of raw materials and crude oil through the roof – the latter being an essential part of the construction industry due to its reliance on crude for shipping and the production of construction materials. Costs have escalated dramatically in the last few years with the pandemic, and now, war.

GOVERNMENT LAND SALE COST

Twice a year, in March and September, the Government Land Sale (GLS) programme offers up a list of land parcels that are ripe for development. Prospective developers are invited to submit their bids for the land parcels via an open tender.

Developers engage in a fierce bidding war for land parcels, determined to secure the perfect space for their projects. This can lead to higher prices for the project, as more bids mean a higher cost of land. It is evident from the graphs that land prices are growing steadily, and this is a cost passed on to homebuyers.

DEVELOPMENT CHARGE < LAND BETTERMENT CHARGE LBC

Developers must pay the Singapore Land Authority (SLA) a newly-minted Land Betterment Charge (previously known as a Development Charge) in order to gain permission for projects that increase the value of land. In the case of residential developments, a condominium is a great example of where this levy applies, as it alters the plot ratio to allow more homes to be built.

LBC rates vary according to the type of development and its location – divided into 118 geographical sectors. Similarly to GLS sites, the changes to LBC charges are usually announced in March and September. As you can see from the table, the September changes saw some major increases – the largest increase for non-landed residential projects.

As we adjust to life in a post-pandemic world, certain industries such as shipping and construction are striving to regain their former efficiency. Though they’re making progress towards normalcy, it’s certain that the costs of operations will increase and be a lingering concern. To make matters worse, the ongoing Ukraine-Russian conflict has had a profound effect on global commodities such as crude oil, a necessity for countless facets of our lives. Even more disconcerting is the possibility of inflation emerging in the face of all this.

No doubt, property prices will continue to go up in the near future – making it impossible to pick the right time to buy a house. But there are ways to make the most of the situation! The G.R.O.W Method (GROW) is a tried-and-true method to create wealth and has helped countless people. It outlines an easy-to-follow plan for how to use property to secure your financial future.

Find Out More when my next GROW Method Workshop is happening

Explore >> https://jaysonang.com/explore/

Disclaimer:

While every reasonable care is taken to ensure the accuracy of information printed or presented here, no responsibility can be accepted for any loss or inconvenience caused by any error or omission. The ideas, suggestions, general principles, examples and other information presented here are for reference and educational purposes only.

This information contained herein is not in any way intended to provide investment, regulatory or legal advice or recommendations to buy, sell or lease properties or any form of property investment. PropNex shall have no liability for any loss or expense whatsoever, relating to any decisions made by the audience.

Top 5 Reasons to Invest in Commercial Property in Singapore – Expert Insights!

Jayson Ang – March 23, 2025

Singapore, a thriving business hub in Southeast Asia, offers a robust real estate market with diverse investment opportunities. While residential...

All Opinion

Budget 2024: What To Expect For The Singapore Residential Market?

Jayson Ang – February 18, 2024

TLDR In 2025, owner-occupiers of residential properties can benefit from property tax relief based on the Annual Value Band. Retirees...

Mandarin Top 5

Top 5 : Golden Tips to Spot a Good Investment Property

Jayson Ang – March 9, 2025

Investing in real estate can be a lucrative venture, but it's essential to know how to spot a good investment...

All Buying Tips

Why It’s Not Financially Sensible to Pay Off Your HDB Flat Home Loan in Advance

Jayson Ang – April 29, 2024

TLDR When deciding whether to repay your HDB flat loan early, consider the limitations of not being able to obtain...

Mandarin Top 5

Top 5 Bookstores in Singapore for Book Lovers

Jayson Ang – March 27, 2024

Singapore, a bustling cosmopolitan city, is known for its rich cultural heritage, diverse population, and of course, its love for...

Mandarin Top 5

5 Reasons Why Singapore Loves Investing in Properties

Jayson Ang – March 28, 2024

Property investing is a popular and lucrative option in Singapore due to several reasons. Firstly, Singapore's stable and growing economy...

Mandarin Top 5

Top 5 Must-Try Foods in Singapore

Jayson Ang – July 12, 2023

Top 5 Must-Try Foods in Singapore Singapore, a melting pot of cultures and cuisines, offers a diverse and tantalizing array...

All Buying Tips Opinion

Neighbourhood Estate Guide: Is Holland Village the Most Charming and Relaxed of HDB Estates?

Jayson Ang – January 1, 2025

According to the 2014 master plan, Holland Village was given the prestigious title of an "identity node," confirming its status...

Mandarin Top 5

Navigating Singapore’s Real Estate Market: The Truth Behind 5 Common Misconceptions

Jayson Ang – March 19, 2024

The real estate market in Singapore is known for its stability and attractiveness to investors both locally and internationally. However,...

All Blog Posts Buying Tips

The Quick Guide For Buying Landed Property In Singapore

Jayson Ang – January 2, 2023

TLDR When it comes to purchasing a landed property in Singapore, there are three main types to consider: terrace houses,...

All Blog Posts Buying Tips

Discover How The CPF Accrued Interest Can Impact Your Property Sale Proceeds

Jayson Ang – April 12, 2023

Singaporeans are renowned for being smart and savvy - especially when it comes to selling their homes, whether it's an...

Mandarin Top 5

Top 5 : Greatest Challenges That Investors Face In Singapore’s Real Estate Market

Jayson Ang – May 8, 2025

Singapore's real estate market is a dynamic and attractive investment landscape for both local and international investors. Known for its...

All Blog Posts Buying Tips

Buying a Second Property – 3 Key Factors to Consider

Jayson Ang – June 18, 2023

TLDR When navigating the complexities of purchasing a second property in Singapore, ensure you meet eligibility criteria, consider affordability factors...