We’re all worried about the rocketing cost of living in Singapore.
With the GST increasing and things getting more expensive overall, we youngsters can only dream of getting a BTO.
Fret not, as the soaring costs are only temporary, according to Deputy Prime Minister Lawrence Wong.
Why Are Home Prices and Rentals Increasing?
According to Mr Wong, the fundamental root cause of this issue is supply.
Before the COVID-19 pandemic, the housing market, which includes both public and private, was relatively stable, with resale prices on the public market decreasing for six consecutive years from 2013 to 2019.
The pandemic, however disrupted housing projects, affecting the market as a whole and its supply.
While “demand also comes down” when supply was affected during crises in the past, this time, Mr Wong said that “demand stayed very strong.”
Speaking at a roundtable discussion on the Budget on Monday, organised by The Straits Times and The Business Times and sponsored by UOB, Mr Wong mentioned that Singaporeans became more anxious as Build-To-Order (BTO) flat queues became longer due to stunted supply.
Those who didn’t manage to get their flats on time went to the resale market, which “pushed up prices.”
Demand in the private property market increased as buyers wanted more space in their flats, and some Singaporeans, especially younger ones, wanted to live independently.
More Singaporeans and non-Singaporeans who sought to move to the country due to its good performance during the pandemic were seeking to rent flats.
Mr Wong called this entire situation “very, very exceptional and unusual,” as demand is not known to remain high in times of low supply.
According to Mr Wong, there will be about 40,000 new completions for the entire housing market, which is the highest in five years.
From this year until 2025, there will be 100,000 new completions. Cooling measures moderating demand are to be introduced.
“I’m confident we will be able to bring stability back to the market again,” he said.
It is still being determined when exactly this will happen. Mr Wong said, “It may take some time, because you’re not only pushing out supply, but you also have to manage demand, and it takes time for sentiments to change.”
He is, however optimistic that people will start to moderate their sentiments in light of rising interest rates.
Mr Wong also said that the Government and relevant agencies are observing the rental market very carefully to see where they can help, in response to fellow panellist Alvin Liew, a senior executive at UOB’s concern about whether the slowdown in housing price increases will add to costs for businesses.
The agencies are finding out how to accelerate the supply of housing to lessen the cost burden that employers may face.