Singapore's private home prices are now the most expensive in Asia-Pacific, surpassing Hong Kong, according to a new report.
Data from the Urban Land Institute's (ULI) Asia-Pacific Housing Center's Home Accessibility Index shows that the average price of a detached home in Singapore will be $1.2 million in 2022, higher than Hong Kong's $1.16 million.
Private rental housing in Singapore also has the highest monthly rent in the region at $2,600 – “far exceeding” other cities such as Sydney, Melbourne and Hong Kong, the report said.
Modern and luxurious smart homes in Singapore, seen from above on a hot summer day at Keppel Bay Marina in the city centre. Photo: Getty Images
The report collected government statistics from 45 cities across nine markets in Asia-Pacific, measuring housing affordability for both homeownership and rental housing relative to median household income.
Hong Kong “after” Singapore
Hong Kong home prices “fell significantly” in 2022, ULI said, citing a sharp rise in mortgage rates as Hong Kong caught up with the US Federal Reserve.
Hong Kong home prices fell to a five-year low in October as rising interest rates pushed up borrowing costs.
Earlier this month, Hong Kong's monetary authority raised its benchmark interest rate to 5.5%, after the US central bank raised the federal funds rate from 5% to 5.25%.
The ULI report said “net population outflows” and “less optimistic views” on the local property market also caused Hong Kong’s average home price to fall 8.7% from $1.27 million in 2021 to around $1.16 million in 2022.
Meanwhile, Singapore's private homes have overtaken Hong Kong to become the most expensive in Asia-Pacific, with average prices rising more than 8% over the past year, the report said.
The most expensive cities for private housing in Asia-Pacific. Source: Urban Land Institute Asia Pacific Centre for Housing
Just last month, Singapore raised taxes on property purchases amid concerns that rising prices “could get ahead of economic fundamentals.”
In a new round of cooling measures, the Singapore government said domestic and foreign buyers of residential property will have to pay higher taxes, known locally as additional buyer's stamp duty.
However, the report added that private homes in Hong Kong remained the most expensive per square meter, costing $19,768 and “more than double” the average figure for Singapore, Shenzhen and Beijing.
Rent price increase shock
Singapore's private rental homes have the highest monthly rents in the region, rising nearly 30% by 2022.
ULI attributes the rise in rents and house prices to a variety of factors, such as increased migration, slowing construction completions and young professionals leaving multi-generational family homes for more space and freedom.
Private house prices have fallen in Sydney and Melbourne as people return to regional cities and there have been an “unprecedented” 11 interest rate hikes in 12 months, the report added.
But houses and apartments across Sydney, Melbourne and Brisbane have seen increases in average monthly rents.
The average monthly rent for a house in Sydney is $1,958 while the average monthly rent for an apartment is $1,732.
The most expensive cities for private rental housing in Asia-Pacific. Source: Urban Land Institute Asia Pacific Centre for Housing
“There has been a reversal of the population movement back to capital cities since the end of Covid-19 in 2022. This could be one of the reasons for the increase in average rents in the country,” David Faulkner, President of ULI Asia Pacific, told CNBC.
Expensive but buy a lot
Although Singapore's private homes are the most expensive in the region, the city also has the highest home ownership rate at 89.3%.
That's despite a 7.9 per cent increase in average Singapore Housing and Development Board (HDB) prices from 2021 to 2022, with the ratio of average HDB prices to average annual income also rising from 4.5 to 4.7. HDB, or Housing and Development Board, is Singapore's public housing agency.
For private homes in Singapore, the rate is 13.7%.
“In general, home ownership is considered unaffordable when the ratio of median house price to median annual household income exceeds 5,” the report said.
“By this standard, only HDB flats and apartments in Melbourne and Brisbane, Australia, are considered affordable.”
Similar to last year's index, mainland Chinese cities ranked lowest in terms of housing accessibility.
The report notes that China's home ownership rate has “decreased significantly” over the past 10 years.
“Cities’ housing affordability is directly tied to the amount of new housing supply relative to population growth,” the report added.
“For Shenzhen, its population increased by more than 7 million people in the 12-year period from 2010 to 2022… but the new housing supply increased by only 31 million square meters, the smallest increase among Chinese cities in the same period,” the report said.
Hoang Tu/According to CNBC
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