Investing in property always seems to be an intriguing and rewarding option for investors. If you had invested in property years ago and plan to make your next investment move in the current market, then there are various market trends which you must know about before making your move. Trends have changed a lot over the last decade. The spiking increase in flat resale prices, ABSD, and TDSR has changed the dynamics to a great extent.
This article will highlight some of the most recent market trends which you must take into consideration before investing in property in 2022.
Increased Demand for Spacious Properties
Everybody loves spacious properties, right? Having a large space where you can accommodate your family or run a small home-based business is what everybody dreams of. But these spacious properties come with a hefty price tag. You might wonder that there is less demand for these properties in Singapore.
Trends have changed a lot, since COVID-19 arrived in the global image. Lockdowns and restrictions have brought people towards remote working mindset. More and more people are now shifting towards home-based working environments, although offices are now open for employees. This massive change in the working environment has boomed the demand for spacious properties where people can set up a proper office workspace for themselves or their colleagues.
Rental Market is at Peak
Like spacious properties, there is also a massive rise in the demand for rental properties. The core reason for this increase in demand is the restrictions of the pandemic. Many Malaysian migrants working in Singapore were affected by this pandemic and lack of availability of work forced them to reside in rental properties before they could make their next financial move.
The same goes for individuals who were planning to move into their new homes. The financial adversities brought by pandemic also forced such individuals to stay in rental properties before everything could come to normal condition.
Migrants and expatriates are the major source of booming rental market since 2020. All such factors contributed to a constant rise in rents. We will witness this rise in 2022 as well.
Property Market Cooling Measures
After a constant rise in the property market, Government stepped in and brought some cooling measures to take control of this massive boom in property market. It does not matter if you are a local investor with years of experience or a foreign investor planning to try your luck in the property market; these cooling measures will surely affect your investment outcomes:
- Additional Buyer’s Stamp Duty (ABSD) for foreigners is increased to 30%. This will surely reduce capital profit gains straight away.
- Total Debt Servicing Ratio (TDSR) threshold is reduced from 60% to 55%. With lesser TDSR, you will now have to service your home loans and debts with 5% less monthly income cap than before.
- Additional Buyer’s Stamp Duty (ABSD) for second home buyers is 17% now. It was 12%, prior to this increase. This will keep the property prices affordable for genuine home buyers in Singapore.
- HDB loan minimum down payment increased from 10% to 15%. Now you have to pay 5% more for your HDB loan upfront.
With these cooling measures adopted by the Government and changes in other trends after 2020; investors planning to invest in property market must assess all the factors thoroughly to ensure that their investments are profitable. Making a hasty investment move can turn out to be a massive loss in such circumstances.