Market in Depth

Despite the pandemic Singapore remains healthy

Lalaine C. Delmendo | April 03, 2021

Singapore's housing market remains healthy, despite a struggling economy caused by the COVID-19 pandemic. The private residential property index rose by 2.21% during 2020, following y-o-y rises of 2.67% in 2019, 7.85% in 2018, and 1.09% in 2017, according to the Urban Redevelopment Authority (URA). When adjusted for inflation, house prices rose by 2.16% y-o-y last year.

During the latest quarter (i.e. q-o-q in Q4 2020), residential property prices increased 2.08% (1.67% inflation-adjusted).

The Outside Central Region is still rising fastest:
  • In Core Central Region (CCR), prices of non-landed private residential properties fell slightly by 0.37% (-0.43% inflation-adjusted) during 2020, following a 1.7% decline in 2019, according to URA. Yet quarter-on-quarter, prices increased 3.17% (2.76% inflation-adjusted) during the latest quarter.
  • In the Rest of Central Region (RCR), property prices were up by 4.69% (4.64% inflation-adjusted) during 2020, an improvement from the prior year's 2.8% growth. Quarter-on-quarter, prices rose by 4.42% (4.01% inflation-adjusted) in Q4 2020.
  • In Outside Central Region (OCR), property prices rose by 3.2% (3.15% inflation-adjusted) during 2020, following a y-o-y increase of 4.2% in the previous year. During the latest quarter, prices increased 1.77% (1.37% inflation-adjusted).

The continued increase in house prices was mainly due to strong demand, coupled with weak residential construction activity. There were 10,833 uncompleted private residential units launched in Singapore in 2020, down from 11,345 units in 2019, according to figures released by URA. On the other hand, residential property transactions, including new sales, sub-sales and resales, rose strongly by 9.2% y-o-y to 20,909 units in 2020, following annual declines of 13.5% in 2019 and 11.5% in 2018, according to URA.

Yet due to the imposition of pandemic-related travel restrictions and lockdown measures, foreign demand plunged last year, with the total number of private houses purchased by foreigners in the country falling to a 17-year low of just 742 units in 2020, according to real estate consultancy firms ERA Realty Network and Orange Tee & Tie.

Overall, market sentiment remains positive, with many hopes on the successful rollout of COVID-19 vaccines and improving economic conditions. The volume of resale homes could increase by around 5% to 10% in 2021, while new home sales are expected to remain more or less steady, according to Chistine Sun, the head of research and consultancy at OrangeTee& Tie. Private home prices will continue rising between 1% and 4% this year.

Singapore's economy contracted by 5.8% in 2020 from a year earlier, following a y-o-y growth of 0.7% in 2019, according to advance estimates released by the Ministry of Trade and Industry (MTI). The economy grew by an average of 5.3% annually from 2010 to 2018.

Singapore house prices
The economy is expected to grow by 5% this year and by another 2.6% in 2022, according to the International Monetary Fund (IMF).

Foreigners have been able to buy any apartment without prior government approval since the Residential Property Act of July 19, 2005. However, foreigners still cannot purchase vacant land and landed properties without permission from the Singapore Land Authority. Non-residential property is not subject to these ownership restrictions.

Analysis of Singapore Residential Property Market »

Rental Yields

You wouldn't own a Singapore condominium for rental yields!

Singapore is a safe haven, it is a liquid market, everyone in Asia knows and trusts its institutions. Low interest rates have played their part in pushing property prices up, despite the efforts of the ever-vigilant Monetary Authority of Singapore and the government. Property in Singapore commands a premium, and conversely returns to owners who rent out their properties are low.

Nobody can say that condos in Singapore are cheap, at around US$14,000 - US$18,000 per square metre (sq. m.). That´s because there´s a ´global city´ premium. Gross rental yields in Singapore remain poor, at around 3.0%.

Round trip transaction costs are very low in Singapore. See our Property transaction costs analysis for Singapore and Property transaction costs in Japan, compared to the rest of Asia.

Read Rental Yields »

Taxes and Costs

Rental income tax in Singapore is high

Rental Income: Net rental income earned by nonresidents is taxed at 22%. Property tax, insurance, maintenance and repairs are all deductible from gross rental income.

Property Tax: Property tax is levied at a flat rate of 10% for rental properties. Foreigners pay a 10% surcharge.

Capital Gains: There is no capital gains tax.

Inheritance: There is no estate duty as of 15 February 2008.

Residents: Residents are taxed on their income at progressive rates, ranging from 2% to 22%.

Read Taxes and Costs »

Buying Guide

Roundtrip buying costs in Singapore can reach 34.45%

The total roundtrip costs are about 13.45% to 34.45%. The buyer pays stamp duty at around 1% to 3%. The buyer may pay additional stamp duty of 5% to 15. Because Singapore uses a common database of all property listings, there is no sense in hiring more than one agent. To register the property, there are four procedures, typically done in six days.

Read Buying Guide »

Landlord and Tenant

Singapore favours landlords

Singapore condominiumsWith the passage of the Control of Rent (Abolition) Act in 2001, the law in Singapore became clearly pro-landlord.

Rents: The parties can freely determine the rent and the rate of rent increase. Tenants usually pay a security deposit of one month’s rent for every year of lease.

Dispute Resolution: Most landlord and tenant disputes are resolved through mediation or Alternative Dispute Resolution, usually through groups such as the Consumer Association of Singapore (CASE) and Singapore Mediation Center (SMC).

Read Landlord and Tenant »


Economic contraction

Singapore’s economy contracted by 5.8% in 2020 from a year earlier, following a y-o-y growth of 0.7% in 2019, according to advance estimates released by the Ministry of Trade and Industry (MTI). The economy grew by an average of 5.3% annually from 2010 to 2018.

During 2020:
  • Manufacturing expanded by 7.1%, following a 1.4% fall in 2019
  • Construction fell by a whopping 33.7%, in contrast to a 2.8% growth in 2019
  • Services fell by 7.8%, following a 1.1% increase in the prior year

The economy is expected to grow by 5% this year and by another 2.6% in 2022, according to the International Monetary Fund (IMF).

Despite a widespread expectation that the economy will gradually improve this year, the outlook remains uncertain. “Notwithstanding the shift to Phase 3 of reopening, further recovery in domestic demand would likely be constrained by the continued weakness in tourism, and large labour market slack. We also keep a close eye on possible renewed infection waves in the community, which could halt or even reverse the reopening process,” said Citi economists Kit Wei Zheng and Ang Kai Wei.

Singapore gdp inflation
Unemployment was 3.2% in Q4 2020, an improvement from the previous quarter’s 3.6% but remains far higher than the prior year’s 2.3%, according to the Ministry of Manpower (MOM). Unemployment among Singaporeans was 4.5% in Q4 2020, up from 3.3% a year earlier. Similarly, the jobless rate among PRs rose to 4.4%, from 3.2% in Q4 2019.

Headline inflation was -0.2% in 2020, down from 0.6% a year earlier, according to Statistics Singapore. Core inflation also declined to -0.2% last year, from 1% in 2019.

In October 2020, the country’s central bank, the Monetary Authority of Singapore (MAS), retained the rate of appreciation of the S$NEER policy band at 0% per year to boost economic activity.

“In its April 2020 Monetary Policy Statement (MPS), MAS set the rate of appreciation of the S$NEER policy band at zero percent per annum, starting at the then-prevailing level of the S$NEER. There was no change to the width of the policy band,” said MAS. “This policy stance was assessed to be appropriate given the deterioration in economic conditions and weaker inflation outlook, and aimed to complement fiscal, liquidity and financial policies in supporting the economy through the COVID-19 downturn.”

The average exchange rate in December 2020 was USD1 = SGD1.3325, a slight appreciation from USD1 = SGD1.3567 a year ago.

Get GPG fortnightly newsletters delivered to your inbox

A quick summary of global real estate trends.