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You Snooze You Lose: Why There is No Perfect Time to Enter the Market

“Good things are worth waiting for” - not referring to buying a house

It is true in many instances in life, the good things are worth the wait. Alas, this doesn’t apply to housing. Without reading the entire article, you have probably already seen it plastered all over major media outlets, that housing prices continue to surge. Latest figures released by the Urban Redevelopment Authority (URA) showed that private home prices rose for the 10th straight quarter in Q3 2022, climbing by 3.8% from Q2 2022. In the first nine months of 2022, private home prices rose by 8.2% from end-2021.

The evidence - OCR breaking new grounds

It can be evidently noticed as well, private homes in the Outside Core Region (OCR) fared the best in the last quarter with an increase of 7.5%. This significant gain was first sparked by Amo Residences which was launched in July earlier this year, where a staggering 98% (362 units) of the available units were sold on the launch day at a median price of $2,113 psf. Adding to the amazing results that quarter were the subsequent two launches within the OCR in September, both Sky Eden@Bedok and Lentor Modern, moved 76.6% or 121 units at a median price of $2,118 psf and 84.6% or 512 units at a median price of $2,108 psf respectively.

Given the three successful launches, we saw the average prices of launches in the OCR breaking above the $2,000 psf range. This signifies an acceptance by property buyers that paying over $2,000 psf for an OCR project could be the new norm. Let’s take a look at what are some of these factors that are driving up property prices.

The biggest culprit of them all

Construction cost has risen ever since the start of the pandemic and has even reached record-high levels in 2022. The construction sector is faced with such an unprecedented circumstance as they grapple with higher material costs, manpower crunch, and inflation. These circumstances have inevitably raised the cost of construction by at least 30% since 2019.

The disruption to the supply chain caused by the pandemic took a toll on the sector as those supply chains are now playing catch up to meet the demands by clearing the outstanding backlog. To make matters worse, the Russia-Ukraine conflict caused prices of raw materials to soar, along with a sharp rise in global crude prices. Crude oil is essential for the construction sector as areas like shipping and the production of construction materials heavily rely on crude oil. Take a look at how costs escalated over the last few years with the pandemic & now the war.

Government Land Sale Cost

The Government Land Sale (GLS) programme happens in March and September every year, the government will put out a list of land parcels that are available for development projects that are for development purposes. Developers who are interested in acquiring the land parcels will have to submit their bid through an open tender.

The land parcels go through a land-bidding war between developers vying for their chance to secure the space to build their new projects. The eventual price of a project could also be determined by the price developers are able to get the land at. Land parcels that are popular would receive more bids and thus driving up the prices.

As you can observe from the three charts below, the commonality between them is that land prices are on a rise and the increase in the land price is then translated to homebuyers.

Newly-minted Charges

Land Betterment Charge (LBC), previously known as Development Charge (DC), is essentially a tax developers have to pay the Singapore Land Authority (SLA) to get permission for projects that increase its land value. As we are focusing on residential developments, a condominium would be a good example that LBC will be applicable as it changes the plot ratio to accommodate more units being able to be built.

LBC rates differ from types of developments and also its location, which the latter is split into 118 geographical sectors. And similar to the release of GLS sites, the changes to LBC charges are released in both March and September as well. As you can observe from the table below, the last round of LBC released in September saw significant hikes in its rates - the biggest hike notably for non-landed residential projects.

Don’t sleep on it

As we continue to lead our lives in a post-pandemic world, some sectors such as shipping and construction are trying to play catch up and operate the way they did before. But as they work towards normality, it is certain that a rise in cost will be a factor that would plague them for a while. And to add fuel to fire, the long-drawn Ukraine-Russian conflict has also taken a toll on global commodities such as crude oil, which is a necessity for too many components of our daily lives. What’s worse is having inflation creep up in the background against all that is already happening.

It is undeniable that housing prices will continue to rise in the foreseeable future, that is why there is no such thing as the best time to buy a house, because the best time was yesterday. But things might not be as grim as you think they may be, you can actually find ways to work around rising costs, interest rates or inflation. Property Wealth System (PWS) is a proven wealth creation system that has benefitted many ordinary people. It takes you through a framework on how one can easily & successfully use property to secure your future.

Let's have a chat to see how you can navigate through and make your next property move!


While every reasonable care is taken to ensure the accuracy of information printed or presented here, no responsibility can be accepted for any loss or inconvenience caused by any error or omission. The ideas, suggestions, general principles, examples and other information presented here are for reference and educational purposes only.

This information contained herein is not in any way intended to provide investment, regulatory or legal advice or recommendations to buy, sell or lease properties or any form of property investment. PropNex shall have no liability for any loss or expense whatsoever, relating to any decisions made by the audience.

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