Although prices of Singapore properties have fallen in recent months due to the stringent cooling measures by the government, housing here remains “seriously unaffordable” with a score of 5.0, according to findings of the 11th Annual Demographia International Housing Affordability Survey 2015.
The study used the “Median Multiple” which is the median house price divided by gross annual median household income to rate housing affordability across 378 cities in nine countries, with a grade of 3.0 and below being affordable, 3.1 to 4.0 (moderately unaffordable), 4.1 to 5.0 (seriously unaffordable) and 5.1 and above (severely unaffordable).
In a statement, Demographia said this method of calculating housing affordability is widely used for evaluating urban markets, and is recommended by the World Bank and the United Nations.
Aside from Singapore, the report also tracked property markets in Australia, Canada, China (Hong Kong), Ireland, Japan, New Zealand, the UK and the US.
Singapore was surprisingly rated more favourably than some other markets traditionally seen as less pricey such as Australia (6.4) and New Zealand (8.2). With a rating of 17.0, housing affordability in Hong Kong has spiralled out of control.
“Singapore has been far more successful in controlling housing affordability than in markets that have followed the British urban containment model,” said the Demographia report.
“Further, as is typical in urban containment markets, governments have failed to bring the housing cost escalation under control by liberalising land use regulations,” it added.
Restrictions on foreign buyers were credited for shielding the city-state from skyrocketing prices seen as the result of globalisation of real estate markets.
For instance, foreigners have to pay an Additional Buyer’s Stamp Duty (ABSD) of 15 percent when purchasing a private residential unit.
Meanwhile, the Housing and Development Board (HDB) which is responsible for public housing was singled out for praise. “Singapore has an overall 88 percent rate of homeownership, the highest of any country in the survey. Buyers are free to sell their own houses, without any further intervention by HDB,” stated the report.
According to preliminary data from the housing board, prices of resale HDB flats fell 1.4 percent in Q4 2014 from the previous three-month period. As for private units, URA flash estimates revealed that in the last quarter of 2014, prices dropped by 1.0 percent, higher than the 0.7 percent decrease in the quarter before.
Data from both HDB and URA shows a price decline over the past five consecutive quarters.
Romesh Navaratnarajah, Singapore Editor at PropertyGuru, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg
