The Singapore real estate market is one of the most resilient in the world.
Despite the on going COVID-19 pandemic, the private residential property index rose by 2.21% in 2020, following year-on-year increases of 2.67% in 2019, 7.85% in 2018, and 1.09% in 2017, according to data from the Urban Redevelopment Authority (URA).
During Q4 of 2020, Singapore home prices rose 2.1%, the most in more than two years prompting speculation that the Singapore government may impose more measures to cool the market.
The last round of cooling measures happened in July 2018 when the government raised Additional Buyer's Stamp Duty (ABSD) rates and tightened loan-to-value (LTV) limits on residential property purchases, in an effort to cool the property market and keep price increases in line with economic fundamentals.
Even with the increasing prices, many of us would want to maintain the value of our properties and not let it go down.
In today’s article, we will look at some factors that can affect the value of your property.
Factor 1 - Location
As they say when buying real estate, “location, location, location”.
Properties within walking distance to MRT stations, “branded” schools and major amenities are always more popular and in demand.
Sometimes, an up-coming government project could result in a windfall for those in the vicinity.
An example would be the district of Jurong, considered by many as the industrial heart of Singapore. Jurong houses numerous flatted factories and chemical and power plants and the air was considered unhealthy.
However, in 2008, the URA announced plans to transform the Jurong Lake District into Singapore’s second Central Business District (CBD). Immediately, the residents of Jurong were expecting the value of their property to go up and rental prices were increased.
There are so many stories of how parents with children entering primary school buying properties near “branded” schools such as Raffles Girls’ Primary School (RGS), the Anglo-Chinese School (ACS) family of ACS Junior and Barker Road, Tao Nan Primary School etc.
With priority admission given to children living within 1 and 2 km of the school, demand for such properties will always be high.
Factor 2 - Upgrading Plans
HDB has the Lift Upgrading Programme (LUP) and the Home Improvement Programme (HIP) for older flats built in the 1960s and 1970s.
The LUP upgrades lift services to achieve direct lift access on every floor where feasible, thus enhancing residents’ convenience.
The HIP will resolve common issues of aging flats such as spalling concrete and structural cracks. It also replaces pipe sockets with new clothes drying rack and residents have the option to upgrade their existing toilets and bathrooms, replace the main doors and gate.
Aging flats that have undergone HIP have seen the value of their flats going up.
Similarly, for your own property, you can consider updating the kitchen and toilet, repainting the walls and installing new cabinets. This way, your property will remain in good condition and therefore maintain or even increase its value.
LUP and HIP is only applicable for HDB flats, so for private properties, you should ensure that your home is always in a good condition.
Make sure that any leakages, faults or problems are repaired immediately to avoid further damage. Give your home a new coat of paint every few years to give it a fresh look. This will ensure that your home is always looking new and well-maintained.
Factor 3 - Interest Rates
With banks’ interest rates for floating home loans are at their lowest in recent years, many people are making long-term purchases and in land scarce Singapore, real estate one of the major long-term purchases.
That is why sales of new private properties in March this year was the highest since 2017 with 1,296 units sold.
HDB resale transactions also rose sharply in 2020 to an eight-year high in with prices for resale flats last year climbing to its highest since 2012.
When interest rates are low, borrowing becomes cheaper and more people are becoming more confident in taking on debts. When the monthly instalment becomes more affordable, purchasing a property becomes an attractive investment. When there are increasing buyers, naturally the prices will go up as there is more demand.
Similarly, if interest rates were to go up, less people would be able to afford the monthly instalments as the higher interest rates would make investing in real estate less attractive.
Factor 4 - Economic & Income Growth
The state of the economy can also determine the direction of the property market. Income growth and unemployment will also be affected by how well or badly the economy is doing.
With the current pandemic, though local demand for real estate is still strong, foreign demand has waned somewhat. With travel restrictions and movement restrictions, overseas buyers are not able to travel here for their property investments.
When a country’s economy is booming, people’s income will increase resulting in higher spending power. As one’s income goes up, there is a tendency to invest to grow our assets, and property is one of them.
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