Singapore Property Episode 1
Welcome to the first in our Monthly Singapore Investor updates where we look at the local market opportunities and the opportunities for Singapore Investors in overseas markets.
Charlyn is a local Singapore agent and Brett is an experience UK, Australian and Singapore commentator and investor.
Video Transcription
Brett Alegre-Wood
Hey guys, Brett Alegre-Wood from Brett's property rants and Charlyn Ding from homes in the Lion City. Welcome. Thank you. So today what we're gonna be covering is the Singapore private property outlook for 2022. What are your thoughts?
Charlyn
So I mean, the Singapore economy is slated to grow three to 5%. This year, however, there's several headwinds. The first would be inflation, which is seen
Brett Alegre-Wood
around the world. She's already I mean, we're already seeing in our food bills and things like that. I think. And I think that's going to continue. Definitely. Yeah.
Charlyn
And interest rate hikes. Yes. And of course, omicron. So it's a bit of fun, a little bit of uncertainty, because it's spreading all over the world. But we've seen some countries kind of resolve it. Yeah. So
Brett Alegre-Wood
I think because it's not as deadly, using a lot of more opening up. And so therefore, I think the economies that recover the quickest are going to be the ones that open up the quickest. But then, you know, that may also backfire, as it has done in the past with the Delta variant, but I guess, you know, we're just gonna play it as we see it. Yeah. I was the be that control that.
Charlyn
Yeah, exactly. So that's why the home prices this year in 2022, might not be as buoyant as 2021 way. Simple did really well, you know, even towards the end of the year, with the borders opening, there was a lot of optimism, but that has kind of died down a little bit. And, of course, with the government's new cooling measures, which was a bias, you know, the whole of December, that has kind of, you know, other people have taken a wait and see approach. Right?
Brett Alegre-Wood
it is it is amazing. I mean, I'm always amazed that the how fast they come in with these measures, they give no warning they come in, and they do. But in some ways, I mean, you know, I work on the investment side of property.
And so it's, you know, it's a bit of a pain in the bum with that. But the positive thing is actually from a, a, getting first time buyers on the ladder and getting Yeah, I mean, between HDB's and, and these cool measures, actually, the measures are really quite effective compared to what other countries do that have massive problems with, you know, house price growth, and getting people on the ladder and that sort of stuff.
Singapore really has, it really is a beacon of light for most other countries. And you know, I often joke when I'm in the UK, and I talking about HDB's. And people can't believe that they've got a system like that, because it's totally like public housing. It's totally failed. UK just isn't fit for purpose. But yeah, but here it is, you know, and I guess, as much as investors like, I don't want the cooling measures, I don't like the stamp duties and the ABS DS and things like that tedious hours, but they serve their purpose, they do tend to work.
Charlyn
Yes. However, this round of cooling measures doesn't really affect majority of the homebuyers outside, you know, at least at the genuine homebuyers who are looking to upgrade the first timers. Because the ABSD the additional bias stamp duty, it remains the same for them.
So which demographic, which segment of the market is really hit? It's really the investors, the foreign investors, because now the additional bias stamp duty increase by 10%. So right now, it's a huge hefty 30%.
So we're looking at the investment market and products in the core central region, we're looking at that kind of like, not moving not having a growth this year. Yeah. But for the outer regions, we're still looking at how they go
Brett Alegre-Wood
About this is quite an interesting thing is yeah, you've got those high end places and the core central regions, which yet they're they're going to, you know, they don't have the demand coming in from overseas because of the the what are probably the most onerous taxes.
You know, maybe some of the Scandinavian countries, you know, have worst ones, but actually, it's it's pretty impressive and bold move on the government's part. So yeah, 30% That's a big!
Charlyn
Yeah, I mean, it came up from 20. So essentially, the 10% high, but in most countries, you know, so the number of foreign investors and foreign buyers for projects now have declined sharply. So really, the whole market in Singapore is lifted by the genuine homebuyers, Singaporean prs. Yeah,
Brett Alegre-Wood
yeah. Which, and, you know, from my perspective, you know, I work in the UK market, that's a great thing, because we're getting a lot more inquiries from Singaporean investors buying, you know, in the UK, you know, in places like Australia as well, which, obviously, if you can tell the accent, I'm Ozzy.
You know, so they're benefiting from this, because there's nowhere else to go. It's not like Singapore investors can buy or would want to buy. And, yeah, because 30% is a 5% growth a year, that's six years before you're back at zero, you know, whereas the UK, you know, you might be six 8%, depending on what, you know, stamp duty.
Well, that's probably two years, you know, but somebody like London is bouncing back now. Yeah, we're gonna get 10% growth, potentially, you know, that you'll see when it bounces back, you know, that can be paid off in one, you know, one or two years you're away. So,
Charlyn
and I think the other aspect is the availability of liquidity. Because, again, with this round of cooling measures, we can take less loan, right? So the total debt servicing ratio has reduced to 55% for the first home, and if you want to buy a second home for investment, it's going to be harder, more difficult to take a loan. So probably looking overseas, it's the only thing that can do.
Brett Alegre-Wood
Yeah. And you know, it's interesting compared to overseas, it's a lot, you can get a lot higher loan devalues, which means borrow more, you know, so it really is not attractive to overseas buyers, which is actually I guess, the strategy for Australia. Yeah. I mean, yes, that I want the perspective, you know, we're buying and flipping and that which they've got really got rid of that by the additional buyer stamp duties. That Yeah, well, you know, so for investor, it's not a good landscape for investing in Singapore property right now just
Charlyn
yet. Yeah, I think so. So when investors take loans, so they take onshore offshore?
Brett Alegre-Wood
I think it's a bit of both, I mean, we, okay, by Father, there was a period where they, they would go onshore, because the interest rates are a lot cheaper here. But for the most part now, probably 80 to 90%, of taking them offshore, through HSBC, so that so you can get outside the TDSR side of things. Yeah. You know, because that really did put a real damper on the market. I mean, that's 567 years ago, longer now, you know, I've been in here for 10 years.
So, but yeah, but I think, you know, investors right now, it's not the landscape for them to invest in, which is what the government wants, they want to hold prices down. Yeah, to get people on the ladder, you know, make it easier not house price. Yeah. But um, so what about some of the other areas? What are you What do you think's happening?
Charlyn
So right now we look inside Singapore, you know, where Singapore is kind of like, drawn and separated into three areas, the core central region, and the rest of the central region and the outside of the central region. So like we mentioned, investors, usually they look at the core central region, which is, you know, the prime, the luxury region. So that is kind of slated to stay zero growth, I would say, zero growth.
And then the rest of central region, if you look at these lines, and they're showing the PPI, really you can look at them climb up this way. Right. So I think my take on that is that because the rest of central region, the prices are going up so high, as you can see, the gap between the luxury segment and masses is really decreasing. It's getting smaller. So maybe you guys could take this opportunity and jump into the CCR.
Brett Alegre-Wood
Yeah, I think there's lots of opportunity, especially if you're buying your first property. Now, you know, it's a good time to get in, you know, there's there's always headwinds, there's always going to be inflation, inflation is with us now, all the time.
There's always going to be interest rate potentially rising, there's always going to be potentially COVID, potentially, you know, recessions, all these things are always going to be present. But I think the the government is run well, you know, it's the economy's working well, you know, and certainly as things start to open up, that will even get better.
So that's, you know, it's a good time to meet. I think it's a great time to get in and get on the ladder if you can. So, yeah, so how about I'm new properties and new housing? What is that?
Charlyn
What about it? So let's see. I mean, a lot of things are happening, a lot of exciting things. We haven't received new launches this year, although the volume is less, we're looking at about maybe 9000 new units being launched. I mean, we closed 13,000 new units last year. Right.
So and then there is still genuine demand from upgraders. And homebuyers so but because of the quality measures and the lack of supply, so maybe new home volumes will decrease will drop. Yeah, yeah. But prices will be buoyant.
Brett Alegre-Wood
Yeah. Which I suppose is good news for those for those people that want to line up and wait for the new launches. It's always it always blows me away. Because 10 years ago in the UK, people used to line up for launches. But we haven't seen that for years now. Yeah. Whereas they still do it here.
Charlyn
Yes, yes. Amazing. So like with Kenny, who appears with Java, as mentioned, and even the most recent Belgravia is, which is cluster housing. Within the lunch weekend. The soda like 90% for Belgravia is for Java, as mentioned, it was 99%. There's just one unit left after the weekend, and essentially people sit there, they wait the queue to talk about numbers. Yeah.
And then the prices are adjusted a few times in a day. But it also shows that there is demand for it. And they believe in the projects. Yeah. So they're good projects that people want to buy.
Brett Alegre-Wood
Fundamentally, Singapore is an island. It's a city state Island. And so it's got a limited amount of land. So you know, and really the way we're not building down, so we've got to build up. And so, you know, and actually the government's very good with that in terms of, you know, taking down old buildings. You know, in the UK, we have buildings that are so freakin old. It's ridiculous. And they just want to get rid of them, you know. So, I like the attitude here.
And I think that really does show in a buoyant property market where the investors are educated, you know, they're, I mean, they're prepared to wait in lines, whether it be for food or property. Whereas I think UK Australia, not not so much Yeah, yes,
Charlyn
unblock and renewal renewing. There will be an another unblock cycle this year.
Brett Alegre-Wood
Yeah, it's interesting last last cycle to some of the land prices, he went for it. Yeah, sometimes you got to sit there and just step back and have a look at how they're gonna make money. But then you realize that, you know, obviously, you know, they know their numbers, you know, I think that's quite good.
Charlyn
And black light hits a new record, its new department.
Brett Alegre-Wood
Yep, it does. And prices keep creeping up and creeping up. And I think in some ways, we get this creeping up over time, as opposed to this, you know, up and down, up and down, up and down, which the government doesn't want. Yes. Whereas in a lot of countries, like the UK, we get this up and down, up and down, although, actually, to be fair, in the UK, we've had, you know, the down, and then a civil on the bottom, with austerity and all that sort of stuff.
We haven't seen the massive growth last year was a good year. But I think it's interesting to see the two different markets operating and how they operate. And I think an active government that takes a proactive approach to pricing and a productive process apply. And both from a developer's perspective, but also an unbiased perspective, and investors actually works really well.
Now. Is it safe? I guess, where's the government in the UK? Really? They've got no idea. I mean, I think we've had seven different housing ministers in six years, you know, so there's no continuity, there's no coordination. And basically, it's almost like the Wild Wild West, even though that market is hundreds of years old, 1000s of years old, technically, you know, so yeah.
Charlyn
So where's the UK now, then.
Brett Alegre-Wood
So UK, the UK is an interesting one. Because UK, you can't with a lot of these sort of things. You can't just say, the UK because UK is a large 70 million people. And the reality is, you've got to decide where you're talking about, if you're talking about London versus, say Manchester or Birmingham, you know, major cities versus the suburbs in the middle of nowhere, which, you know, what we're finding is, it all comes down to fundamentals. And it's a bit like here, too, you know, the best areas are going to see your best growth. Okay, same in the UK, you got to buy where the fundamentals are the shops, the schools, transport things, major employers major investment, yeah. And if you buy with those sort of things, you know, and you've buying areas to getting investment into them, then in a renewing themselves, then actually your property price growth will happen. But I think one of the problems is there's a lot of areas in the UK where people are the kids grow up, and they're leaving going to the cities. And so now the ageing population is becoming, you know, massive in those areas, and there's no infrastructure. And so you don't want to really be buying in those areas, unless they're in a commuter town or but again, that comes back to fundamentals. So I think really, it's a two speed economy or property market in the UK, where you've got the areas that are getting invested in that have the fundamentals and the areas that the fundamentals are in decline. They're not the original to get into. So where are they I mean, your cities now your major cities. The thing with the UK is you now have London, Birmingham, Manchester, some might argue Liverpool, Leeds, and a few of the secondary major cities, but really, for those three, you know, London, Manchester, Birmingham, those three cities for our world cities, they attract massive amount of inwards investment. And that's been very good, because actually, the UK was rundown for a lot of years, but we're seeing now it's picking up in that in those areas. Outside, not so much, you know, so I think, you know, we're gonna see growth this year, again, probably similar numbers, we were looking at sort of five percentage around that sort of stuff. But London's gonna come back, and that will form a higher portion of the increase. You know, and I think it'll work well, I mean, of course, we could go into recession, and that could drop 10% of the days, but what you tend to find is places like London, they'll bounce back quick. So you might lose 10. But then you gain 12, the next year. So you haven't actually, yeah, it was a rough year, but you get it back. Whereas some of those areas, they'll drop 10. And they won't recover the 10. Yeah. And that's where you
Charlyn
don't want to have any more like influx of people coming in.
Brett Alegre-Wood
There's no real demand. There's no real investment. There's nothing nothing going for it, basically. Yeah. Yeah. So it's, you've got to pick your areas, and you've got to work with people. Now, if you're buying from if you're sitting here in Singapore, thinking about buying the UK, you've got to find people that know the local areas, not necessarily people who are given a brochure and saying, Look, this is great. Yeah, exactly. Maybe see, yeah, you really do want that, you know, that knowledge on the ground? And do your research, you know, like anything? Yeah. So how about land and property in a
Charlyn
land or property in Singapore, again, very unique in Singapore's little island, and a finite amount of land, right. So, you know, the number of landed housing in Singapore is not going to grow. It's either going to remain the same or reduced because there are people buying plots of land or houses and redeveloping them into apartments. Right. So the prices in Singapore last year for London housing grew from grew by 10 to 10.5%, which is which is quite a lot in a year. You know, there were 3300 transactions and the prices really propped up by the GCPs as well, there was there were 33 transactions, and the highest record transaction was $4,200 per square foot. Yeah, so it changed hands at $63 million. Including hill so yeah, those prices are crazy. It's not a condo. It's like a house. It's a big big house. But yeah, landed prices in Singapore. Yeah, very healthy. Not going anywhere but up. Yeah, exactly. Yeah. See one you like to step it up? Yeah.
Brett Alegre-Wood
And we're happy to help you. Yes, absolutely. Yeah, it's, it's it's just a it's almost a crazy market. But you realize that actually, Singapore is an international city. So you've not just got Singaporeans. Now, at that level, you've actually got International, you know, whether they be Chinese, whether they be Malaysian Indonesian, you know, people from all around the world wanting to come here. Yes. I mean, I suppose a good class bungalow. To be fair, they got to get admission.
Charlyn
I mean, foreigners can buy landed housing in Singapore, if they have permanent residency, but then again, they need to apply from LD AU. And it's apparently really difficult to get I don't know whether we want to say that but apparently is more difficult than applying for PR. So what's happening is yes, you're right. The foreigners are buying these houses and the GCPs. But they are applying for citizenship first. Yeah. So that's that.
Brett Alegre-Wood
Yeah. So yeah. So what's your summary? What what do you think about the market where
Charlyn
I mean, even today, I had a couple of buyers, and we're chatting and they're like, should I buy now? Should I wait? Should I continue renting? My professional point of view is that if you're looking to buy something, it would be probably prudent to take action sooner rather than later, prices are still going to grow. So if you're going to like rent for another year, it's just another years of rental in that sense. But if you can afford to wait. Just because you're living somewhere, then then maybe. But I think my take is to
Brett Alegre-Wood
freak with, with the Singapore government. They've got all these cool measures in place, if things started to downturn, they can always pull them off and stimulate the economy. Like a lot of countries where you know, they've got no room to maneuver, Singapore's got massive, remenham Uber, so even if things start to, you know, the wheels start to fall off, they can, you know, pull back these cooling measures, you know, exactly. Five rounds. Exactly. And that, you know, it's not most countries will put them in and pull them off. Singapore has been adding and adding and adding and basically pull them off. Yeah, but I mean, to be fair, you know, I've been here 10 years, and all I've seen is really, you know,
Charlyn
yeah. So on that point, right. Like you said, if they start seeing a cooling off, they will pull it off. But they will do that before even pulls off. Yes, yes, yeah. So you can see a constant rise. It's just they don't want to raise it too fast. They don't want it to the prices to rise too fast. But you won't see a drastic downturn, because they were not much interested. Yes.
Brett Alegre-Wood
And to be fair, that, for me, that is the purpose of the government that they should be doing that. And they've got, you know, the good thing, is that the data available to them to see what's going on what supply what demand? Yes. And they can play? And they're prepared to, which is great. Yeah.
Charlyn
So there are measures that they can, you know, adjust.
Brett Alegre-Wood
So So for me, I think, you know, in some ways, with a government like that, in the environment we're in, you know, with lots of maneuverable room to maneuver, there's no reason that you shouldn't be buying now and getting on
Charlyn
if you're looking to buy in Singapore, that is That's right. Yeah, definitely. You know,
Brett Alegre-Wood
I mean, with other countries, you know, you might need to look at, you know, you know, their individual circumstances, their individual economics and politics, and, you know, a whole range of things like that. But at least with buying in Singapore and your own country, you kind of know that it's a known quantity. But I think that's a mistake a lot of people make is they go to the US, they go to Australia, they go to, you know, UK or whatever. But they don't realize that they've got to adjust the rules of the game. They're playing over there. So they can't apply the Singapore model to the UK or the US. Yeah, got a change.
Charlyn
We need to like ask you.
Brett Alegre-Wood
And that's why working with someone who knows that market locally, someone you can trust and build a relationship with. But nothing, you know, there's no real familiar from my perspective, there's no real nothing in any of these reports in any other sort of stats that show that we're likely to see any of this. Yeah, we just come through COVID and not much happen. In fact, prices increase. Exactly. And the government's are willing to stimulate the economy now, which I think is adding a new dimension that we haven't had, whether giving money to the individuals for many years, I've given it to corporate bond holders and things like that. But now they're willing to go to that another level, which is great. So yeah, I think it's pretty good. You know, a good time to get involved. Because once you buy a house, you don't regret it. You settle into that, that becomes the norm and then you can look to what how do we update Go from BTO to our resale to our condo to you know now I feel awesome. Well, thanks very much. Thank you.
So guys, if you've got any questions Brett's property rents or else a home's in the lion city.
see you in our next videos guys!
Charlyn and Brett
