Prices for property in Singapore have reached a record high, as the island-state becomes increasingly attractive to foreign investors.
Private residential property prices rose 5.2 per cent in the second quarter to the highest level since the government began the index in 1975, the Urban Redevelopment Authority has said.
Prices rose 5.6 per cent in the first quarter, bouncing back strongly after diving 25 per cent in the 12 months to mid-2009. This means there has been an overall 10.8 per cent price increase in the last two quarters alone.
Singapore’s low crime rate, good schools and low taxes mean that expatriates and investors are increasingly attracted to the property market.
The city-state often ranks highly in expatriate quality of life surveys. In Mercer’s 2010 Quality of Living survey, it was ranked as the 28th best city to live out of 221 cities, making it the top-scoring Asian city.
The quantity of houses sold has also increased. According to property consultants CBRE, around 8,300 new homes were sold in the first half of 2010, which acounts for 56.5 per cent of the 14,688 new homes sold in 2009.
They said that the properties which sold well in the second quarter were mostly in the low- to mid-tier price range.
Alvin Tan, director of residential sales for Savills’ Singapore’s office said: “A firmer economic recovery, a robust GDP growth, and optimism surrounding the two new [casino] integrated resorts could be possible factors that continue to draw buyers into the market, lending support for the current prices.
“Barring any external shocks, prices may continue to trend upwards but at a more sustainable pace for the overall market. For the high-end segment in particular, prices may rise by five to eight per cent over the next six months and could possibly surpass the previous peak in early 2011.”
Singapore has sought to slow price gains by implementing a series of measures to discourage short-term speculative investment in property.
Earlier this year the government imposed a one per cent to three per cent tax on residential properties sold within one year of purchase and lowered the loan-to-value limit to 80 per cent from 90 per cent on loans for private housing.
Officials have also promised to release more government land this year for real estate development.
Gross domestic product grew a record 15.5 per cent in the first quarter from a year earlier, and DBS Bank said it expects a 16 per cent expansion in the second quarter.
Peter Evans, sales director at property consultants Forbes Le Brock, said that Singapore’s high prices had also been driven by its small size, which restricted the amount of development possible. “Investing in Singapore, despite its high prices, is therefore a good opportunity, as there will be a more limited supply of land in the future.”
He advised people looking for property in Asia to use a good English-speaking lawyer, and to make sure they carried out diligent research into the developer.
According to Mr Tan, 23.2 per cent of private property in 2009 was bought by foreigners. The top three foreign nations buying private homes in 2009 were Malaysia (25.1 per cent) Indonesia (18.4 per cent) and mainland China (16 per cent).