Debunked! 6 Popular Property Myths of 2023, Including the 99-1 Loophole – Legal or Not?
TLDR This blog post delves into various aspects of the Singapore property market, including topics such as decoupling, 99-1 property...
Read More
Why There’s No Perfect Time to Enter the Market
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.
You May Also Like …
6 Factors Making Singaporean Properties Difficult to Sell (Even in a Strong Market)
TLDR Properties in Singapore may linger on the market due to several key factors. Small boutique developments face price volatility,...
Read More
Top 5 Tips : How Investors Protect Themselves From Risk And Capitalize On Emerging Opportunities In Singapore’s Real Estate Landscape
The real estate landscape in Singapore has always been a lucrative investment opportunity for both local and international investors. However,...
Read More
Increase in ABSD April 2023
TLDR The impending rise in ABSD (Additional Buyer's Stamp Duty) is expected to suppress investment demand, allowing local homebuyers to...
Read More
6 Compelling Reasons Why 3-Bedroom Condos Might Shrink Further
TLDR Three-bedroom units in Singapore have significantly downsized from 1,700-1,800 sq. ft. in the 1980s to around 1,000 sq. ft....
Read More
8 Untold “Savings” Hacks You Need To Know As Soon As Possible
TLDR Undervalued properties in Singapore are those priced at least 10% below market value, often due to urgent sellers, developer...
Read More
Thinking About Investing In An Old Landed Property In Singapore? 7 Crucial Tips To Keep In Mind Before You Make Your Move
TLDR Older properties come with unique challenges due to outdated design elements, potential roofing issues, odd land shapes, basement drawbacks,...
Read More
Discover the 7 Unique Attributes of Real Estate Investing
TLDR The post highlights the benefits of investing in real estate, such as high leverage, capital appreciation, income generation, usability,...
Read More
What Role Does Property Valuation Play In The Real Estate Industry, And Why Is It Important?
TLDR When it comes to property valuation, understanding the process is crucial for both buyers and sellers. Property valuations can...
Read More
Top 5 Singapore Must-Dos: Unforgettable Experiences Await!
Singapore, a vibrant city-state known for its diverse culture and world-class attractions, offers an array of unforgettable experiences for both...
Read More
Top 5 Factors: Singapore Property Market: Attractive Investment Opportunity Despite Cooling Measures
The Singapore property market has always been a popular investment choice for both local and foreign investors, thanks to its...
Read More
I Regret Buying A DBSS: 5 Homeowners Share Their Biggest Regrets
TLDR Singapore's DBSS scheme faced challenges such as design flaws, developer responsiveness issues, and restrictions on selling. Residents reported various...
Read More
Navigating the Transition: Right-Sizing from a Condo to an HDB Flat in 2025
TLDR Right-sizing from a condo to an HDB flat in 2025 requires careful planning beyond lifestyle adjustments. Sellers face a...
Read More
Unpacking Property Ownership: Joint Tenancy vs. Tenancy-in-Common
TLDR When a property has multiple owners, the choice of ownership type is crucial to determine how shares are distributed...
Read More
The Power Imbalance: Why Singaporean Landlords Often Have the Upper Hand
TLDR Singapore’s rental market reveals a clear power imbalance favoring landlords. Limited housing supply, rising demand from expatriates, and high...
Read More
Top 5 Hawker Centres in Singapore for Local Food
Singapore, a melting pot of diverse cultures and rich culinary heritage, is home to some of the most delectable local...
Read More
Top 5 Reasons : Why Ultra-Rich Families Racing To Park Wealth In Singapore
Singapore, a small island nation in Southeast Asia, has become a magnet for the world's ultra-rich families seeking to park...
Read More
5 Key Factors that Affect Singapore’s Property Prices
Singapore, a thriving city-state known for its impressive skyline and robust economy, has one of the most dynamic and competitive...
Read More
Why Buying an Older EC Can Beat a Million‑Dollar HDB Today
TLDR With resale HDB flats crossing the million‑dollar mark, older Executive Condominiums (ECs) have become a compelling alternative. At similar...
Read More
2024 Residential Property Market Outlook
TLDR The market outlook for 2024 suggests continued uncertainties affecting housing demand and risk appetite due to geopolitical tensions, macroeconomic...
Read More
