Singapore’s government – renowned for its efficiency – has been facing the pressure of demand for property largely surpassing supply. Currently, there is a large number of homes waiting to be finished, but in the interim prices will continue to increase.
January 2013 brought in new regulations for Permanent Residents: after expiry of their current lease, Permanent Residents are not allowed to rent out their units. This implies that many of them will want to sell out their HDB flats by January 2014 or January 2015, as Permanent Residents who find themselves away from Singapore have no financial benefit from keeping their HDBs, seeing as they are not allowed to rent them out.
Another regulation to make buying property more difficult is the imposition of the MSR (Mortgage Servicing Ratio) of 30 % or less for ECs (Executive Condominiums). Together with the income ceiling (SGD 12,000), this will make buying either an HDB or an EC hard, since the MSR conditions will be failed by many. Because of this, private residential homes are preferred instead of HDB flats or Executive Condominiums.
This means that despite lower incomes, an increasing number of Singaporeans are buying private residential homes. While the imposed measures have succeeded in directing buyers towards private residential housing, the average income has declined. These two situations create a decrease in quality of lifestyle, which enables developers to build ever smaller private residential dwellings.
Currently, because of their financing costs, developers are under the pressure of launching uncompleted units for sale – especially those who are highly leveraged, as they need urgent sales. In contrast, there are developers who will not be impulsive and balance the prices that will be inevitably changed by the weaker developers’ stock.
Because of the numerous measures imposed by the government, the Core Central Region (CCR) has gained increasing popularity, with more and more buyers considering it for their dwelling. The advantage of CCR housing is the relatively low PSF (per square foot), although PSF cannot realistically reflect affordability, as prices for CCR housing may still be beyond the reach of many, as they could range between SGD 3m and SGD 10m.
As all these situations were created after the cooling measures imposed by the Ministry of National Development, the Urban Redevelopment Authority and the Monetary Authority of Singapore, speculations that the measures will be relaxed in the near future have arisen. Despite these speculations, however, the government has announced that they will not be relaxing the imposed regulations, as it is still to early.