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
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 …
5 Key Insights to Take Away from the Latest 2022 Cooling Measures
TLDR Affordability of HDB Market: Government is focused on ensuring affordable public housing and may increase supply if needed. Long-term...
Read More
Singapore Living: 5 Must-Know Factors for Choosing the Perfect Neighborhood
Singapore Living: 5 Must-Know Factors for Choosing the Perfect Neighborhood When it comes to purchasing a property in Singapore, the...
Read More
The Influence of Soaring Land Costs on Singapore’s Real Estate Market: A Look at Land Price Trends Since 1992
TLDR When it comes to understanding the fluctuations in land prices in Singapore, historical patterns reveal significant spikes and dips...
Read More
Top 5 Reasons : Why Does Singapore Have Such Extensive Restrictions On Foreigners Purchasing Residential Property?
Singapore, a thriving city-state in Southeast Asia, is known for its stable political climate, strong economy, and strategic location. As...
Read More
Top 5 Tips : How to Choose the Right Type of Property to Invest in Singapore – Expert Tips and Analysis!
Investing in property has long been a popular method for growing wealth in Singapore. With million-dollar HDBs being sold and...
Read More
Discover Singapore: 5 Must-See Attractions for a Culture Lovers’ Paradise
TLDR Singapore stands out as a top destination for culture lovers, offering a rich blend of heritage and modernity through...
Read More
21 Condominiums with Landed Properties Available for Foreign Purchase in Singapore
TLDR Foreigners who want landed living in Singapore but cannot buy traditional landed homes (except in Sentosa Cove) can consider...
Read More
Tips for Choosing the Home of Your Dreams
TLDR Decoding the Singapore property market can be challenging, but understanding key factors like property size, location, and lease tenure...
Read More
6 Misleading Claims Property Agents Often Make That Savvy Buyers Are Aware Of
TLDR Real estate agents can sometimes use deceptive tactics to push sales. Be cautious of claims about other interested buyers,...
Read More
5 Warning Signs of New Launch Condominiums That Certain Property Agents Might Not Disclose to You
TLDR When buying a new launch condo, don’t just rely on show flats or sales pitches—look deeper. Watch out if...
Read More
Top 5 : Factors Influence Real Estate Investors’ Decisions when Investing in Singapore Condos?
Singapore's real estate market has always been an attractive investment option for both local and foreign investors. The city-state's stable...
Read More
Tips for Young Adults to Begin Saving for Their Future Home
TLDR When aiming to purchase a home, it is crucial to gain knowledge about the buying process and track your...
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
Top 5 Overlooked Features that Buyers are Looking for in Singapore Property
The top 5 overlooked features that buyers are looking for in the Singapore real estate market. These are the overlooked...
Read More
Top 5 Singaporean Dishes to Try
Singapore, a melting pot of diverse cultures and flavors, is known for its rich culinary heritage. With influences from Chinese,...
Read More
What Hidden Costs Are There When Selling Your House?
TLDR When selling your house, be prepared to cover expenses such as outstanding home loans, legal fees, property agent commissions,...
Read More
The Unexpected Choices: Why Some Singaporean Homebuyers Opt for Smaller Condos (Even When They Could Afford More Space)
TLDR In Singapore's property market, buyers often prioritize factors beyond just size. Many choose smaller units within their budget due...
Read More
Beyond Marina Bay Sands: Uncovering Singapore’s 5 Little-Known Secrets
Beyond Marina Bay Sands: Uncovering Singapore's 5 Little-Known Secrets Singapore is a small country with a rich history and culture....
Read More
Singapore Private Residential Market Outlook 2023
TLDR The Singapore residential property market has shown resilience in 2022, with price growth in both private housing and HDB...
Read More
