Despite the cooling measures implemented in Q4 2021 to cool the Singapore property market, the strong demand for residential properties and the lack of supply have resulted in home sales rebounding in March 2022, after being subdued for the first two months of the year. Additionally, the continued easing of COVID-19 restrictions has seen a recovery in the office market, as companies prepare for employees returning to the office and the expected increase in business activities.
However, the impact of rising interest rates has already resulted in the cooling of residential markets overseas. With inflation pushing up housing prices and higher mortgage rates in the U.S., further reductions in transactions in the U.S. housing market are likely. In the U.K., despite the record high housing prices, the higher interest rates and the increased cost of living will likely reduce affordability and lower housing prices over the coming year. Whether the Singapore real estate market will be affected in a similar fashion remains to be seen.
What caught our eyes this month?
Singapore's Housing Shortage Risks Bid To Cool Home Prices
While property curbs have already begun to take effect, the shortage in supply, combined with resilient demand during the pandemic, may continue to fuel prices which surged the most in more than a decade last year. By the first quarter of this year, Singapore had 14,087 unsold units still under construction, the lowest since that data point was made available in 2006.
Singapore Office Market Recovery Well Underway: Colliers
Premium and Grade A office rents in the CBD rose for a third consecutive quarter in Q1 2022, increasing 1.5% q-o-q to reach SGD10.26 psf, supported by healthy leasing demand. This marks the fastest pace of growth since rents rebounded in Q3 2021. The healthy leasing demand is backed by corporates’ preference for newer office buildings with high-quality specifications, in preparation for employees returning to the office and the expected pick-up in business activity.
U.K. House Prices Hit Record High But Cost Of Living Crisis Likely To Cool Market
U.K. house prices hit a record average of GBP282,753 in March but are likely to ease over the next year as homebuyers face higher interest rates and the cost of living squeeze, Halifax has said. The UK’s annual inflation rate reached 6.2% in February, the highest in three decades, and the Bank of England said that figure could rise to 10% later this year, putting further pressure on living standards.
Read also: Investing in the UK Real Estate Market
U.S. Housing Market Exhibits More Signs Of Slowdown
Housing affordability is even more strained as prices continue to rise and mortgage rates surge. The typical contracted rate for a 30-year fixed-rate mortgage has risen from 3.3% at the start of the year to 5.2%. This is prompting a slowdown in transactions and with more supply likely coming to the market in coming quarters the chances of a housing slowdown is growing.
Crypto Boom Opens Door To A New Class Of Landlords
Several tech startups are aiming to use blockchain technology to create a new form of investment in real estate. They add to a growing movement built around shared ownership and cooperation, often called distributed autonomous organisations, or DAOs. But it’s not clear whether the idea of democratising investment in rental properties will sit well in a tight housing market that’s already seeing huge change thanks to other tech startups, such as Culdesac.
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Disclaimer: The information and/or documents contained in this article does not constitute financial advice and is meant for educational purposes. Please consult your financial advisor, accountant, and/or attorney before proceeding with any financial/real estate investments.