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Homebuyers are among thousands of locals buying up property in Singapore and taking a share of the business not seen in a decade as travel curbs thwart international investors, undeterred by the economic downturn and growing unemployment.
This wide-based purchasing binge, which has driven prices and sales to multi-year peaks, has several comparisons with a bubble in the housing sector seen when Singapore emerged from the global financial crisis in late 2009, which prompted multiple rounds of cooling steps to be introduced by the government to cap rising prices.
This time around, observers largely don’t anticipate a replay as certain curbs still stay in effect. Last week, however, policymakers alerted consumers about the appeal of cheap mortgages because of the size of employment losses in the affluent market center, which has already seen many immigrants depart and the population shrink.
“Given the uncertainty of the labor market in the current economic condition, prospective buyers should remain cautious in buying their land,” the Ministry of National Development said last week in a written reaction to a parliamentary query on the possibility of a “bubble.”
This year, the government expects the Singapore economy to shrink by 5-7%, eclipsing a previous contraction of 2.2% in 1998 and representing the worst decline since independence in 1965.
Singapore property prices rose 0.8 percent to their highest pace since 2013 in the third quarter, although sales volumes soared to a two-year low, the latest data shows.
According to an analysis by the property firm OrangeTee and Tie, Singaporeans purchased approximately 81 percent of all private apartments sales in the third quarter, the largest proportion since early 2009.
According to property consultancy CBRE, several investors, such as Ms Jenny Lin, a 26-year-old accountant, have used the pandemic as a chance to get on the ladder of the third most costly housing sector in the country, after Munich and Hong Kong.
“You could really get a decent offer on the property price when Covid-19 first launched, as many people were scrambling to sell their properties away for fast cash to save their main company,” said Ms Lin, who expedited her purchasing of a one-bedroom apartment in May for S$ 530,000.
Despite the chaos of 2020, Singapore’s private house prices dropped only in the first quarter and have since risen.
For contrast, after the global financial crisis, rates fell for four straight quarters between the middle of 2008 and 2009. At just 0.1 percent, the average price growth in 2020 was modest. But Singapore real estate is a secure bet for investors, like wealth manager Amy Zhang, who just bought a S$1.17 million investment house, relative to the competitive capital markets she has invested in for years.
There are several threats to the closely regulated economy, long used as a safe-haven. Because of declines and tighter international labor curbs, drop in expatriates also lead to a drop in rental as the expats are leaving the island-state, driving the first decrease in the population of Singapore since 2003 and forcing rents lower.
But, like many others in a nation where the land open to investors is closely regulated for price regulation, Ms. Zhang purchased a proposal and is banking on a better rental sector when her property is ready in two to three years.
Singapore’s land has long drawn the super-rich from its less established Southeast Asian neighbors as well as China’s multi-millionaires. Political instability in Hong Kong has also helped galvanize the attraction, analysts note, even though certain international transactions were placed on pause owing to travel restrictions for Covid-19. There will be an inflow of international investment into the property sector until all travel prohibitions are removed,