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.

How to Avoid Forfeiting Your Security Deposit: A Guide to Your Rental Property

Jayson Ang – July 30, 2023

TLDR When bidding farewell to your rented property, ensure the safe return of your security deposit by: Regular Aircon Servicing:...

All Blog Posts

HDB Market Outlook 2023

Jayson Ang – January 8, 2023

TLDR: Understanding the HDB Market Outlook 2023 The HDB resale market showed resilience in 2022, with significant growth in sales...

All Blog Posts Buying Tips

An Essential Guide to Buying a Home in Singapore 2023

Jayson Ang – January 17, 2023

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

All Buying Tips

A Guide to Purchasing a New Launch Condo in Singapore in 2023

Jayson Ang – October 26, 2023

TLDR When buying a new launch condo in Singapore, start by planning your finances to determine loan and property limits....

Mandarin Top 5

Top 5 Nature Walks in Singapore for Hikers

Jayson Ang – June 20, 2024

Singapore, a bustling city-state known for its impressive skyline and modern architecture, is also home to a plethora of natural...

All Buying Tips

Want To Buy A Property? Read Me First!

Jayson Ang – December 7, 2022

TLDR Understanding the key factors involved in buying property in Singapore is crucial for making informed decisions. Consider your investment...

All Buying Tips Opinion

The Shifting Landscape: Why More Singaporeans Are Opting for Larger HDB Flats Over Condos for Upgrades in 2025

Jayson Ang – August 10, 2026

TLDR By 2025, more Singaporeans are choosing larger HDB flats over condominiums as their upgrade path. Rising condo prices, especially...

All Buying Tips

Why The URA Master Plan Matters For Your Property’s Potential

Jayson Ang – March 24, 2024

TLDR The URA Master Plan entails significant shifts like the relocation of Paya Lebar Airport or creation of Punggol Digital...

All Opinion Selling Tips

The Peril of Rejecting the First Offer: A Singapore Property Market Insight

Jayson Ang – August 7, 2026

TLDR Rejecting a strong first offer in Singapore’s property market can be a costly mistake. Fresh listings attract the most...

All Buying Tips

Integrated Developments: Do They Live Up to the Hype? Check Out These Five Factors

Jayson Ang – March 3, 2024

TLDR Integrated developments in Singapore offer a one-stop solution for residents by combining residential, commercial, and transport elements in one...