With the start of the new year, some first-time homebuyers in Singapore are understandably nervous: Home prices are at record highs across the board, and it's uncertain if late cooling measures from last December will have a significant impact.
For example, a typical couple of 35-year-old Singaporeans, earning around $2,500 to $3,000 per month, probably have as much as $100,000 to $120,000 in their combined OAs .An additional loan curb - a reduction of the Total Debt Servicing Ratio by five per cent - is almost irrelevant to HDB buyers. These include those who have just sold off private properties to downgrade , those who bust the HDB income ceiling, and families that are all Permanent Residents.
This is coupled with the fact that fewer new launches are expected for 2022 , compared to last year. Current estimates suggest 5,000 to 6,000 new private homes being built for 2022 , down from as many as 10,800 units last year.While the government has put up more GLS sites, this is counterbalanced by higher stamp duties for developers.
So as with resale flats, it's unlikely that we'll see much price dips; just a slower pace of price hikes .For investors who already own two homes, the cooling measures make a third residential property unpalatable. The ABSD for the third and subsequent home, even for Singaporeans, is now 25 per cent - an increase of 10 percentage points from the previous tax.
In any case, it's expected that investors who already have multiple residential properties will be inclined to diversify in 2022. At the same time, prospective tenants - which includes HDB upgraders - may want to set aside a higher budget for accommodations. There is very little bargaining power on the side of tenants right now, and this is likely to carry on for all of 2022.
One example of a big potential change is in the demand for larger homes: Bigger units were the vogue in 2021 due to a large number of HDB upgraders. Here's a crazy stat for you, 35 per cent of all US dollars in existence has been printed since the start of 2020.Hence, low-interest rates have caused inflation to surge in the US and drove Singapore's headline inflation to 3.8 per cent. In the coming year, interest rate hikes are coming in the US, as the Fed tries to rein in inflation.
But at the same time, many cautioned that fixed-rate packages could still be more expensive than floating rates, even for all of 2022.