Things to anticipate in 2022
The value of real estate will continue to climb.
Since the Circuit Breaker in the second quarter of 2020, prices have increased every quarter, and while the rate of growth is moderating, we predict prices to continue to rise for the remainder of 2022. The impact of HDB upgraders is set to continue in 2022, as an additional 31,000 HDB apartments are projected to become MOP-free. The ‘MOP effect’ may not manifest until 2023, when the expected number of MOP apartments reaches 15,700.
In addition, if Singapore continues to reopen its borders via Vaccinated Travel Lanes, foreign investors will return to the market (VTLs). Due to our political stability and low taxation, Singapore has traditionally been a trustworthy option for property investors. Already, more foreigners have begun to emerge.
In the second half of 2021, investors are anticipated to raise their investments, and this trend is anticipated to continue until 2022.
The supply of private dwellings will continue to decline.
In 2022, just roughly 11 new launch projects are anticipated. This scarcity of new launches is attributable to the government’s deliberate reduction of available land in recent years. In recent Government Land Sales (GLS) activities, only two to three confirmed sites were made available, compared to four or more in 2018.
This year, there was a small excitement in the collective sales scene as the GLS pipeline diminished. As of the third quarter of 2021, roughly 25 new en bloc sites have been placed out to bid, compared to only 11 the year prior. It remains to be seen how many will ultimately be sold, especially given that the cost for developers to obtain these plots is far higher than through GLS. Due to the fact that it takes typically 12 to 15 months from purchase to market introduction, this will decide the supply for the following years.
As global interest rates rise, mortgage rates will gradually increase by three percentage points.
In reaction to the COVID-19 epidemic, the United States Federal Reserve reduced interest rates to near zero at the beginning of 2020. In 2021, global interest rates and local mortgage rates increased little but remained mostly stable. Affordability of credit has contributed to the recent property purchasing craze, as obtaining a mortgage is now more affordable than it has been in years. The United States Federal Reserve recently declared that it intends to increase interest rates at least twice in 2022. Although a rapid increase is improbable, mortgage rates in Singapore will definitely grow gradually.
This is due to a time lag, and it will take some time for mortgage rates to adapt, especially because many lenders are increasingly adopting the Singapore Overnight Rate Average (SORA) as a rate benchmark. As mortgages and household debts increase, however, homeowners are advised to be cautious about debt and shifting economic conditions.
Possible imposition of a wealth tax
There is discussion of implementing a wealth tax to alleviate Singapore’s widening wealth imbalance. There is a global need to replace national funds lost by the pandemic’s economic impact. The administration has declared that it supports a wealth tax in theory, but that it would be difficult to execute. The present difficulty is establishing how to fairly apply the tax to a variety of assets, including property. If we impose excessive taxes on the rich, their funds will be diverted elsewhere. This is a worldwide phenomenon, and Singapore has profited thus far.
Launch of a New Project in 2022
Eight of the eleven new properties scheduled to debut next year, including two executive condominiums, will be located in the Outside Central Region (OCR). Tenet EC and Tenah Garden City are their respective designations. This is fantastic news for HDB upgraders and anyone seeking affordable private residences. Two will be located in the Core Central Region (CCR), and one will be in the Rest of the Central Region (RCR) (RCR).
Three megadevelopments with huge land parcels are imminent. They will be located in Marina View, Lentor Hills Residences at Lentor Hills Road, The Reserve Residences in Jalan Anak Bukit, and Lentor Modern in Lentor Central. Popular with homebuyers, these are mixed-use developments with residential and retail apartments. It is also important to note that, with the exception of one future development, all properties are 99-year leaseholds. Those seeking freehold properties should thus investigate past launches or the secondary market.
Will things return to normal in 2022?
In 2021, roughly two years after COVID-19 struck the world, Singapore attempted to switch from pandemic to endemic management of the coronavirus. Many Singaporeans have found a means to continue living, despite the fact that the country as a whole was unable to do so due to the Delta and Omicron variations. In 2022, we will probably certainly continue to struggle with safety management procedures. Given how successfully the bulk of the population has adapted this year, it is unlikely that this will have any effect on the property market, which is anticipated to continue to thrive.
The domestic buying frenzy is set to continue, with the next wave of 31,000 HDB flats reaching the market offering price (MOP) in 2022. If VTLs make Singapore more accessible to overseas purchasers, we anticipate a rise in market participation. In addition, mortgage rates are anticipated to benefit purchasers for the most of 2022. Property sellers and developers are also in accord; since the fourth quarter of the year, a number of developers have gained confidence and begun increasing their prices by 1 to 4 percent. Despite this, real estate continues to be in high demand. In light of these factors, we foresee a robust and resilient Singapore real estate market in 2022.