Singapore housing shortage threatens to fuel rising prices

Following a surge in prices in 2021, Singapore’s government in December introduced measures to cool the housing market that have had some impact

But analysts expect the curbs to be a short-term fix, as the city state’s property boom has left it with a record low number of new homes for sale

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Private residential houses and public housing estates are seen in the Hougang area of Singapore. Photo: Bloomberg

Published: 9:16am, 25 Apr 2022Updated: 11:34am, 25 Apr 2022

Singapore’s property boom has left the tiny island state with a record low number of new homes for sale, threatening to undermine government efforts to calm the market.

While property curbs have already begun to take effect, the shortage in supply, combined with resilient demand during the pandemic, may continue to fuel prices which last year surged the most in more than a decade.

It marks a turnaround from 2019, when Singapore had a glut of homes that weighed on a price recovery. Covid-19 restrictions have led to labour shortages that delayed construction, forcing homebuyers to wait longer and increasing costs for developers who are also facing higher taxes and inflation.

“The low stock of available private homes for sale is expected to push up prices as demand for homes remains firm,” said Alice Tan, head of consultancy at Knight Frank in Singapore.

By the first quarter of this year, Singapore had 14,087 unsold units still under construction, the lowest since that data point was made available in 2006, according to Wong Xian Yang, head of research at Cushman & Wakefield Plc in Singapore. That’s a far cry from the overhang of 30,162 units two years earlier.

The number is unlikely to get a boost from government plans to release more land for sale this year, because that will not enter the home market until 2023, said Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie. “Therefore, the supply crunch may still prolong for a while.”