Throughout 2021, the Singapore property market boomed following a trend that started last year with the Covid-19 pandemic. Minister for National Development Desmond Lee says that private housing prices have risen by 9% since Q1 2020, while HDB resale flat prices increased by 15% during the same period. It's still not clear when COVID-19 will end, but that's an impressive showing nonetheless.

Several factors drove property prices upwards in 2021.

• Millennial couples are looking to buy their first homes, creating a strong local housing market. In the meantime, HDB resale prices are rising due to BTO flats being delayed due to border closures.

• HDB dwellers are taking advantage of surging resale prices for HDB flats and upgrading to larger flats or condos in better locations at a profit. Foreign investors flooded Singapore's property market at the same time, driving demand for luxury properties up.

• Mortgage interest rates are low, which makes buying property more appealing than before.

Market Cooling Measures

Cooling measures began in October when HDB announced a new Prime Location Housing Model to discourage house flippers from buying BTO flats in the central district.

To keep housing affordable for Singaporeans, the Ministry of National Development announced a slew of property cooling measures in December 2021:

• There is a higher Additional Buyer's Stamp Duty (ABSD) across the board, except for Singaporeans and PRs buying their first home.

• Reduction of the Total Debt Servicing Ratio (TDSR) threshold from 60% to 55%, including refinancing existing mortgages.

• HDB loans now require a 15% downpayment instead of the previous 10%.

So looking ahead at 2022, what can we expect to see in Singapore’s property market?

Increased housing options for owner-occupiers.

As a result of these cooling measures, Singapore's average homeowner - the genuine homeowner who seeks to live in a low-cost apartment - will benefit. Singaporeans are not only exempt from most of the cooling measures but also stand to benefit from them.

By reducing demand for HDB resale flats, the cooling measures should make them more affordable for first-time homebuyers and upgraders. In addition, MND has increased the supply of BTO flats by 35%, from 17,000 in 2021 to 23,000 in 2022.

That should result in more public housing options for regular people in 2022 because HDB resale flats are more affordable and there are more BTO flats to ballot for. It is important to note that first-time homebuyers should be aware that HDB housing loans now require a 15% downpayment. It may take more time or discipline to save up for your first home if you don't have much cash or CPF savings.

High demand for HDB resales.

The resale market is likely to remain buoyant despite the increase in BTO supply, as many Singaporeans are still opting for HDB resale flats. This is because construction delays are likely to persist in 2022. Considering Covid-19 has yet to depart, construction's manpower shortage and resulting delays could last well into next year.

In conclusion, HDB resale flats will remain popular among first-time buyers and families looking for bigger flats after completing their Minimum Occupation Period. In light of the recent buzz surrounding Prime Location Housing, it is likely that city-fringe HDB resale flats that are close to the 'prime zones' but avoid MOP requirements will be in high demand, for example, Toa Payoh and Bishan.

Renewed interest in rental housing.

Furthermore, investors will no doubt weigh the added costs against Singapore's rental market's potential revival in 2022. The rental market in Singapore is expected to thrive in 2022 as Singapore's borders slowly reopen and more ex-pats and students are likely to move to the city.

Rents were buoyant even when the market was confined to domestic demand in 2021. A rising number of millennials in need of their own space amid WFH restrictions, couples unwilling to wait a long time for a BTO, and HDB upgraders in between homes are among the tenants seen here by local landlords. Rent rates may rise 8% to 11% in 2022 due to the opening of borders and a spike in demand.

Private condominiums could have had a quieter year.

The private property market had a strong 2021 with 31 new launches and condo units selling quickly. Several were purchased by HDB upgraders who had newly acquired cash, while others were bought by buyers looking to lock in before property prices appreciated further.

Condo launches are expected to slow down somewhat in 2022, however. In light of the limited number of government land sales (GLS) parcels, new condo launches will be limited. There has been talk about en bloc sales reviving prior to the cooling measures - en bloc helps land-strapped condo developers - however, that possibility has been doomed by the ABSD, which is now 40%.

Analysts predict a slowdown in condo sales in 2022 due to the cooling measures targeted mainly at investors and foreign buyers. Rather than the previously projected 9% increase in private property prices in 2022, only 3% is predicted. Conversely, 2022 is also an ideal year for those looking for their first home to shop for one due to a lull in demand and a slowdown in prices.

Rethinking property as an investment.

A major chunk of the cooling measures for 2021 will hit property investors, whether they are local or foreign. A whopping 30% ABSD on foreigners purchasing property could cause foreign demand to drop. Meanwhile, the ABSD has been increased to 17% for locals who are looking to purchase a second property as an investment. This extra 17%  increases upfront costs, reducing potential capital gains.

The TDSR has also been tightened from 60% to 55%, resulting in additional restrictions. The maximum amount of income that can be used to pay off debt, such as mortgages, car loans, and so on, is referred to as the debt threshold. By imposing the new TDSR, investors will have an even harder time servicing two loans.