Singapore – Singapore’s residential real estate sector is expected to experience persistent price growth, falling supply and rising interest rates in 2022, popular real estate website PropertyGuru has said.

The real estate sector has shown incredible resilience in the face of the Covid-19 pandemic but may have to contend with changing macroeconomic trends and housing supply in 2022, the website said in its annual report on the outlook for the country’s real estate market.

The main highlights of the report include rising house prices, a diminishing supply of private housing and a gradual increase in interest rates.

It was reported that the heightened security measures imposed by Covid-19 had a limited impact on “the appetite for residential real estate, with prices rising for the sixth consecutive quarter”.

This sustained growth is expected to persist into 2022, albeit at a slower pace, PropertyGuru said.

In 2022, it is estimated that another 31,000 Housing and Development Board (HDB) apartments will fall out of their minimum occupancy period.

In the meantime, only 11 new projects are expected in 2022. “So there has been a slight buzz on the collective sales scene.

In the third quarter of 2021, around 25 new bulk sites were put out to tender, compared to just 11 in 2020.

“The number of those that are ultimately sold will determine the supply for the next several years,” the website noted.

There are eight projects located in the outer central region, including two executive condominiums and three mega-developments with large lots, such as Marina View and Jalan Anak Bukit.

PropertyGuru also noted that rising global interest rates would inevitably lead to a gradual rise in mortgage rates in Singapore, despite a booming real estate market caused by increased access to affordable credit.

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“Interest rates may rise in the long term but are likely to remain low in the short to medium term,” said PropertyGuru Singapore vice president Paul Wee.

“Homeowners are advised to exercise caution before incurring large new debts and to pay attention to changing economic scenarios that unfold. “

Potential implementation of wealth tax

PropertyGuru pointed out that there had been discussions about wealth taxes in response to observations of a growing wealth disparity.

“The government has said it agrees with the principle of the wealth tax,” and if it is taxed, it will be around 2022 or 2023.

The current challenge is to impose the tax on a range of assets, including property, and ensure that it is conducted in a fair and equitable manner.

Nonetheless, PropertyGuru believes the outlook for next year to be positive, with house prices expected to remain robust and demand to remain resilient as it is driven by HDB valuers and wealthy Singaporeans.

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More foreign buyers will also enter the market if more vaccinated traffic lanes (VTLs) are deployed as planned.

“If you look at what makes the market stronger is the nouveau riche,” said Tan Tee Khoon, country director of PropertyGuru Singapore. “They buy in higher quantities, diverting their wealth to luxury real estate for better capital appreciation.”

Some examples of prominent buyers include general manager of gaming technology company Razer, Tan Min-Liang; CEO of gaming chair company SecretLab, Ian Ang; and the wife of Grab co-founder, Chloe Tong./TISG

Read related: Real estate prices show signs of slowing: Property Guru

Real estate prices show signs of slowing: Property Guru

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