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Everything you need to know is included in our Singapore Property Pack
Are you considering buying real estate in the Lion City? Are you wondering whether now is the right time to make a move?
When it comes to market timing, people have varying opinions. Your friend, who has been living in Singapore, might advise you that now is the worst time to buy, whereas your real estate agent may have a different opinion.
At BambooRoutes, when we create articles or update our pack of documents related to the real estate market in Singapore, we base our work on reliable data and statistics, rather than relying on subjective opinions or hearsay.
We've done extensive research on official reports and government website statistics, resulting in a comprehensive database. Here's what we've learned, which can provide valuable insights for your decision-making process regarding real estate purchase in Singapore.
Happy reading, and let's dive in!
How is the property market in Singapore currently?
Singapore is, today, one of the most stable countries in the world
Positive
If you want to invest in real estate, prioritize stability as it ensures predictable and reliable market conditions. It is an information you need as a foreigner looking to buy a property in Singapore.
You probably already know that Singapore is incredibly stable. The last Fragile State Index reported for this country is 25.8, which extremely high.
Singapore has a strong and efficient government that has effectively managed the country's economy and social issues, resulting in a high standard of living and low unemployment rate. Additionally, Singapore has a strong commitment to the rule of law and a stable political system, which has further contributed to its stability and success.
Investors can definitely rely on the country's stability for investment. Let's review the economic outlook.
Singapore will grow at a moderate pace
Positive
Before buying a property, consider the economic well-being of the country.
According to the IMF's estimations, Singapore will, in 2023, grow by 1.5%, which is positive. As for 2024, the consensus estimate is 2.1%.
This steady growth might keep going since Singapore's economy is expected to increase by 9.9% during the next 5 years, resulting in an average GDP growth rate of 2%.
A moderate growth rate is beneficial for property investors in Singapore, as it indicates that the market is stable and not too volatile. This stability allows investors to make well-informed decisions with a higher probability of success.
On top of that, there are other indicators to pay attention to.
Singaporean business owners have a neutral outlook towards market conditions
Neutral
The GDP forecast is not enough to fully capture the local sentiment, as it relies solely on external projections and may overlook important factors. Thankfully, in Singapore there is a standardized metric that is regularly published. This doesn't apply to every country, so we're in luck.
By evaluating surveys and assessments of business leaders, the Business Consumer Index (BCI) is established as a metric to gauge their confidence in the current and future economic conditions.
The Statistics Singapore reports that the Business Confidence Index has reached a value of 2 for Singapore. It is definitely a small score.
There hasn't been significant change, considering that the BCI score, 12 months ago, registered at 2.
In Singapore, Business Confidence is currently not at its highest level. Nevertheless, this does not imply an imminent crash in the property market. A lower confidence score often indicates a transient period of uncertainty or caution within the business sector, which is a natural part of economic cycles. Therefore, it is important to examine other relevant indicators before making a decision on whether it is the right time to purchase property in Singapore.
Singaporean property prices gain momentum
Positive
Singapore's home prices have increased by 35.2% in 5 years according to Urban Redevelopment Authority.
It means that if you had bought a high-rise condo in Singapore for $2,500,000 five years ago, then it would now be worth around $3,380,000.
Currently, the Singaporean property market is witnessing a notable surge in prices, with accelerated growth gaining momentum.
Certainly, it's a positive indication if you are considering purchasing a property in Singapore. The market is vibrant and showing a growing momentum. However, it might be a good idea to await a market correction in order to secure a more favorable price for your investment.
You can find a more detailed analysis of the real estate prices in our property pack for Singapore.
Everything you need to know is included in our Singapore Property Pack
Singapore's population is growing and getting richer
Positive
When you're looking to buy real estate, consider population growth and GDP per capita because
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Singapore, the average GDP per capita has changed by 9.9% over the last 5 years. It's a solid number. Furthermore, the Singaporean population is growing (+4% in 5 years).
This means that, if you purchase a high-rise condominium in Singapore and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be a rise in rental demand in places like Jurong or Orchard in 2024.
Rental yields are not crazy in Singapore
Neutral
Now, let's delve into the rental yield.
It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in Singapore is purchased for 1,000,000 SGD and generates 50,000 SGD in annual rental income, the rental yield would be 5%.
According to Numbeo, rental properties in Singapore offer gross rental yields ranging from 2.6% and 5.3%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Singapore.
It means that the income potential from a real estate investment is relatively moderate.
Everything you need to know is included in our Singapore Property Pack
In Singapore, anticipate strong inflation
Positive
Inflation is the phenomenon where prices consistently rise.
It's when your regular plate of chicken rice costs 6 Singapore dollars instead of 5 Singapore dollars a couple of years ago.
If you're planning to invest in a property, high inflation can offer several benefits:
- Property values often increase over time, leading to potential capital appreciation.
- Inflation can lead to higher rental rates, thereby increasing the cash flow from the property.
- Inflation decreases the real value of debt, making mortgage payments more affordable.
- Real estate can serve as a hedge against inflation, safeguarding the value of the investment.
- Diversifying into real estate provides stability during periods of inflation.
According to the IMF's estimations, over the next 5 years, Singapore will have an inflation rate of 15.1%, which gives us an average yearly increase of 3.0%.
This data shows that Singapore is anticipated to encounter inflation, making it a potentially opportune time to buy property. If the property's value increases over time, you can sell it at a higher price and make a profit.
Is it a good time to buy real estate in Singapore then?
Let's wrap things up!
2024 presents a compelling opportunity for property investment in Singapore, driven by a range of favorable signals that indicate a conducive environment for real estate endeavors. As one of the most stable countries globally, Singapore provides a secure foundation for property ownership, assuring investors of minimized risks and a reliable investment environment.
The projection of moderate economic growth in Singapore underscores the potential for property investment. Moderate growth often corresponds to increased demand for housing and properties, which can contribute to capital appreciation over time.
The gain in momentum of property prices in Singapore is a clear indicator of a potential trend toward increased value appreciation. This suggests that the property market is showing positive movement, creating opportunities for investors to potentially benefit from value growth.
With the growing population and improving financial status of Singaporeans, the demand for housing and real estate is likely to rise, contributing to opportunities for both capital appreciation and rental income. Moreover, strong inflation can work in favor of property investors, as real estate is often considered a hedge against inflation, providing a means to preserve and potentially increase an investor's purchasing power.
While there are neutral signals, such as business sentiment and rental yields, the combination of stability, growth potential, property price momentum, population prosperity, and inflation makes 2024 a promising year to explore property investment opportunities in Singapore.
We genuinely hope this article has provided you with helpful information.. If you need to know more, you can check our our pack of documents related to the real estate market in Singapore.
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This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
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