There is no denying that Singapore is one of the most dynamic and fastest-growing cities in the world. It is also among the top financial cities in the world making it an exciting place for investors. The key to success in Singapore is being in the right place and that means you need to be in the center of all the action. So why are properties in Singapore so expensive? With the availability of properties in this bustling town so scarce, it has resulted in steadily rising property prices. However, there are other factors contributing to the increasing prices of real estate and the team at Jimmy Sum Real Estate can help you navigate your way around the real estate obstacle course.
Second Only To Hong Kong
It’s hard to imagine what life is like to live in a city like Singapore when the cost of real estate is so high. In fact, Singapore is the second most expensive city in the world next to Hong Kong when it comes to expensive property prices. Once upon a time, the average Singaporean family would have been content to buy one property and plan on staying there for the rest of their lives. Whether the property is an HDB or a private condo, you could almost assume that this would be a long-term arrangement with the possibility of one of the children remaining thereafter the parents have moved on or passed away.
In recent decades, we’ve seen a change in this demographic. Singaporeans have become more skilled thanks to a great education system and this has resulted in the city becoming a hub for highly trained professionals. Many families still purchase a nice small apartment, but more often than not choose to upgrade at some point in their lives. This has definitely contributed to the rising costs of properties in Singapore and the market is constantly changing and evolving.
It’s All About Demand
One of the key reasons why properties in Singapore are so expensive is the lack of availability. Most people choose to live as close as possible to where they work and this is usually within a kilometer or two of the CBD. This is where finding the right property for your needs can be a bit of a challenge. It seems the closer you get to the center of this vibrant city; properties practically sell themselves. No sooner has the real estate agent listed the property, it seems there is already a buyer laying in wait. The scarcity of properties means that those who are selling can demand higher prices.
Buyers Are Often Too Focused On Resale Value
Very few people look at a property and only see a comfortable home for their families. These days, it seems everyone is looking at potential properties with more than one purpose in mind. One such purpose is the resale value. The idea for most buyers is that when it comes time to upgrade, they want to make a nice profit. That makes the average purchaser an investor as well as a potential homeowner. The same can be said for those who are looking at an investment property. Sure, they may be purchasing a property in the hopes of finding a suitable tenant, but they will inevitably also look at re-selling for a bigger better property somewhere down the line.
Foreign Investors Mean Even Less Availability
Singapore is one of the most attractive cities in the world for foreign investors and multinational companies. Registering a business in Singapore is a lot simpler than in many other countries around the world and with a stable government that is relatively free of corruption, it makes Singapore an exciting and wonderful place to set up shop. It is also considered one of the best places in terms of modern innovation. With so many foreign investors and multinational companies flocking to Singapore, there are also more people coming in to make Singapore their new home. The influx of so many foreigners is further driving the demand for properties and contributing to the rising cost of properties in Singapore.
Singaporeans Enjoy A Better Lifestyle
The exceptional education system in Singapore has led to this busy city becoming a very highly skilled one. With so much buying power, Singaporeans can afford a better lifestyle than many of their counterparts in other countries. Many Singaporeans are highly educated, highly skilled, and hard-working. That means they don’t hesitate when it comes to enjoying dinner in one of Singapore’s fine restaurants, cafés and other eateries. The only downside is that this lifestyle is driving the price increases of almost everything and that includes property prices.
Geography – A Small City With A Large Population
Singapore is very much like New York in terms of area compared to population. In fact, the total area of Singapore is 721.5 km² yet almost 6 million people call this city home. Yet somehow, almost miraculously, Singapore continues to grow. New developments continue to appear in this city’s landscape, much to the delight of those seeking luxury accommodations for themselves and their families.
It’s Not All Doom & Gloom
With the lack of properties in Singapore and the rising costs of real estate, many people may think they will never get their foot in the real estate door of Singapore. Fortunately, you can grow and evolve as a property owner in the Singapore property market by starting in government housing in the form of HDB (Housing & Development Board) properties. More and more of these developments are being constructed to meet the high demands of properties and if you are prepared to look a little outside of the CBD, you can find a suitable home to rent or buy in Singapore.
Will Singapore Property Prices Drop in 2020?
The real estate market all over the world has its ebbs and flows, and Singapore is no different in that regard. The first quarter of 2020 has seen the price of private homes in Singapore fall by about 1% and some financial and economic experts are predicting that this fall in prices may be as much as 8% by the end of the year. Part of this has been the result of the worldwide COVID-19 pandemic but other factors may also contribute to properties in Singapore becoming more affordable.
There are some exceptions to this though. The resale value of HDB homes has actually increased and may very well see a 2% rise in 2020. It seems the older the HDB, the better the resale value. One of the reasons for this could be contributed to the rising cost of properties in Singapore. This has made HDB properties a cheaper alternative.
When talking about properties in Singapore, one thing is for certain. The real estate market in this dynamic and fast-moving city will not fall into a slumber, but may simply move at a slower pace. It may mean some types of properties in Singapore will see a slight price drop in 2020, but this will most likely be short-lived and we’ll see the prices rise again and be even higher in the future.
One thing is for certain, if you have been considering purchasing a property in Singapore, do it while you can. If you are still in the deciding phase, talk to one of our agents at Jimmy Sum Real Estate and we’ll help you decide the right course of action for you and hopefully find you the right property when you’re ready to make this all-important step.
