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Home prices have been on fire across global markets and the latest bugbear seems to be Singapore. Given Singapore’s limited land availability, its housing prices have become too hot to handle, per this recent report.
Singapore’s HDB Model
Singapore already has its Urban Redevelopment Authority for building master zoning, urban blueprints and approvals for private residential projects - usually consisting of condominiums and apartments by developers that are retailed at sky-high rates.
In addition, another authority was founded in 1960 for ensuring public housing supply, namely the HDB.
While HDB flats dot several areas of Singapore (80% of citizens reportedly live in these apartments) and 1.2 million have come up since 1960, there’s still no stopping the runaway home price.
Fyi, HDB's not-for-profit apartments come with 99-year leases, but at a huge cost to the SG exchequer. To put it into context, the board reported a financial loss of SG$2.7 billion in FY20 alone.
What’s happening now?
In spite of HDB’s undeniable role in meeting housing demand, home prices are still going up sharply. Reports highlight the Resale Price Index going up by 12.7% for HDB flats last year. Similar price increases were also reported for private residences.
While that might not seem like a BFD, it's fanning fears of eventually-unaffordable housing and a bubble waiting to burst.
What could happen?
Yet, experts anticipate higher construction activity to ease up supply constraints. The Government is also implementing cooling measures like stringent lending regulations and high stamp duties. These could ultimately keep the market on track.