Property trends to watch in 2022: Shrinking private housing supply with increasing rental demand


SINGAPORE: Both private residential and public housing saw a increase in demand in 2021, with home prices hitting all-time highs and annual property sales reaching their highest point in years.

This has resulted in the Government announcing a new property Cooling Measure: Higher Additional Buyer Stamp Duty (ABSD) rates, tightening Total Debt Servicing Ratio (TDSR) and tighter Loan-To-Value (LTV) limit. “If left unchecked, prices could run ahead of economic fundamentals, and raise the risk of a destabilising correction later on. Borrowers would also be vulnerable to a possible rise in interest rates in the coming years.” The measures were introduced to cool both the private and public residential housing market and are meant to “promote continued housing affordability”.

The abrupt implementation of the new cooling measures has somewhat changed the previously optimistic outlook for the real estate market in 2022.

Shrinking Private Housing Supply

Fewer new launches are expected in 2022 as land supply from the Government Land Sales (GLS) programme was moderated over the past two years to keep in line with the uncertain economic outlook due to the pandemic. An estimated 5,400 residential units may be offered across 2022. This is down from the 10,500 units launched previously in 2021. The current supply of private residential unsold units has fallen to about 17,140 units as of Q3 2021.

While the Government has increased the land supply under the confirmed list of GLS sites in 2022 by a rough estimate of about 40 per-cent, it is unlikely that the impact will shape up any time soon. Nevertheless, this could mean that we could look forward to more private residential properties in the near future (possibly from 2024).

Growing Rental Demand

In the first three quarters of 2021, rental rates for private residential housing rose about 7.1 per-cent and is likely to continue growing due to construction delays (for those who need immediate housing), the re-opening of Singapore’s borders (foreigners, expatriates, students) and for those who may not be able to afford to buy a home.

Comprehensively, the full impact of these cooling measures will be revealed in the months to come and may likely be less optimistic in 2022. Property prices are likely to grow more gradually this year as buyers see the reactions of developers and sellers due to the new cooling measures. On top of that, we are still in an ongoing pandemic and the emergence of a new covid variant remains plausible. Which could mean widespread restrictions on travel and manpower with implications on travel and economy.

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