Property is crashing everywhere, except in Singapore. The Asian city-state’s private residential prices are up 14% year-on-year, according to third-quarter data from Knight Frank. That’s a sharp contrast to major cities like Hong Kong and Sydney, which saw decreases of 7% and 4% respectively over the same period.
After years of dizzying growth, real estate in financial centres is getting hammered on the back of rising interest rates and fears of a global recession. Home prices in Hong Kong, the world’s least affordable property market by far, could fall by as much as 30% by the end of 2023 from 2021 levels, reckon analysts at Goldman Sachs.
Singapore is grappling with the opposite problem. The city-state boasts a home ownership rate of nearly 90% as of 2021, thanks to the government’s public housing policies. With average annual real wages growing almost 20% since 2017 and total employment expanding, many households are now looking to upgrade to private residences. Yet due to Covid-19 disruptions, net new housing has fallen below the 10-year average. As of the third quarter, 78% of planned private residential units were under construction, down from 90% in the same quarter in 2021, according to the Urban Redevelopment Authority.
The construction shortfall should ease. Demand, though, will remain robust: Foreign talent is steadily returning, as the city’s non-resident population nears pre-pandemic levels of 1.68 million. Moreover, wealthy Chinese are increasingly seeking safe havens to park their assets beyond the reach of Beijing’s common prosperity drive. In the first eight months of 2022, buyers from the People’s Republic accounted for about one-fifth of the 425 luxury condos sold in Singapore, Reuters reported. As China gradually reopens, even more capital outflows could follow.
That will help buffer the city-state against a painful and sudden correction. Real GDP growth is forecast to slow to 2.3% in 2023, from 3% a year earlier, per the International Monetary Fund. Still, Leonard Tay, an analyst at Knight Frank, predicts an up to 5% increase for private home prices in 2023. Singapore’s housing boom is sturdy enough to withstand a turbulent year ahead.