Houses being sold at million-dollars in Singapore

As a result of COVID-related building delays, hundreds of public housing apartments in Singapore, one of the most expensive cities in the world, are being sold for more than one million Singapore dollars ($716,000).

At least two units have reached the million-dollar threshold in U.S. dollars, and the high prices are igniting discussion of new government policies intended to try to cool booming real estate markets.

Over 80% of Singaporeans now own their homes, one of the highest percentages in the world, thanks to the public housing programme in the Southeast Asian city-state, which offers government-built apartment units to residents directly on a 99-year lease.

Numerous apartments, sometimes referred to as Housing & Development Board (HDB) flats, serve a range of socioeconomic categories and are conveniently situated close to train stations and shopping centres.

A resale market has developed since ownership can be transferred to citizens and permanent residents after five years. Depending on size and location, some apartments that were initially bought for roughly S$500,000 are now selling for twice that amount.

The most expensive resale public apartment this year went for S$1.418 million. It was a large 122 square metre property near railway stations and schools with 92 years left on the lease.

Singaporeans have rented out or sold their HDB apartments at a profit for decades as a source of extra income.

According to Clarence Long, who arranged the sale of a 113-sqm public flat for S$1.4 million in May, “million-dollar HDB flats are here to stay, as there will always be people who wish to live in central areas or larger spaces but are unable to buy private condos.”

According to Long, the cost of a private condo in the same location and size range could easily reach S$2.5 million.

Private condos in Singapore generally have security guards and amenities like swimming pools and gyms, in contrast to HDB flats.

Most first-time buyers of public housing are eligible for government housing subsidies and loans, which reduces their vulnerability to rising bank interest rates and makes them eager to leave the rental market, which has also increased sharply in response to the pandemic.

Rajiv Malhotra, 45, who purchased a 94-sqm public property for S$1.08 million last year, said: “The monthly mortgage for my HDB flat is about S$3,400, this is considerably cheaper as the rental for a similar flat currently will be about S$5,000.”

For public flat buyers with government loans, the average monthly mortgage payment percentage has stayed at roughly 23% for the past three years, the government reported late last year.

The COVID-19 outbreak has caused significant disruptions in Singapore’s construction industry, which is primarily dependent on foreign labour. Limited material supply have also contributed to delays.

According to analysts, the shortage of supplies will start to loosen up in early 2023.

A record 259 public flats were sold for S$1 million or more last year, according to government figures, and there had already been approximately 230 by the end of August this year, even though million-dollar flats still make up fewer than 2% of all transactions.

For those who find the resale market unaffordable, the government also offers off-plan public apartments known as HDB Built-To-Order (BTO) public flats, which normally sell for between S$300,000 and S$700,000.

But the majority of well-liked BTO projects are oversubscribed and take about five years to build, which drives many to the resale market.

The government intended to increase the supply of new BTO apartments last month, according to the Ministry of National Development, in order to fulfil demand.

The number of transactions has slowed somewhat since Singapore announced cooling measures for the real estate markets in December, including increases in stamp duties and credit restrictions.

Given the escalating costs in both the public and private residential markets, the government might take another wave of cooling measures, according to Christine Sun, senior vice president of research & analytics at OrangeTee & Tie.

Sun continued, “But it won’t be simple…because there are willing sellers and ready buyers.

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