facebookWhat’s Really Driving Up Singapore's Property Prices?


What’s Really Driving Up Singapore's Property Prices_

What’s Really Driving Up Singapore's Property Prices?

profileJustin Oh

“Foreigners are driving property prices up!”

“Public housing is unaffordable!”

You’ve probably read something along those lines online and probably think the same way too. I mean, it’s so easy to say that there are too many foreigners taking away our homes and asking for the government to introduce some silver bullet policy that will magically whisk away the problems of housing affordability. After all, complaining is our national sport ain’t it?

As a young adult looking to own my first home, I too am inclined to point fingers and blame the government, foreigners or anyone who is contributing to the ever-increasing prices of a basic human right (according to the UN).

Source: Giphy

But before we get ahead of ourselves, let’s take a look at what REALLY is driving housing prices up in Singapore and deep-dive into the whole economics of it, without getting too political.

Jump to:

Singapore’s Housing Situation – Setting the Context

Before we begin, let’s remind ourselves that Singapore has a total land area of 728.6 square kilometres with about 14 per cent of it used for housing. That brings us to a rough estimate of 102 square kilometres, which is small af for such a densely populated island.

There are two housing markets in Singapore, the public housing market which is essentially your HDB BTO and resale HDB flats, and the private housing market consisting of private condominiums and others.

If you’ve kept up with the news, you’ll know that the private property market is hot right now and I’m sure you’ve seen the sensationalised news of the many million-dollar sales of resale HDB flats.

Source: Mothership

It is true that the prices of housing in Singapore are going up, but the cause isn’t as simple as what many keyboard warriors seem to think (ironic since I’m technically a professional keyboard warrior).

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In order to dissect this topic, let’s go back to economics 101; demand and supply.

Demand for Housing in Singapore


Naturally, with limited space and a growing population, housing prices WOULD go up, even if everything else stayed the same.

It’s simply illogical to compare buying a house in 2022 for $250k and saying that your great grandfather bought a whole mansion for S$10k or something. 

Since 1960, our population has gone up from 1.7 million to 5.64 million.

As a result, our population density has increased as well:

Source: Department of Statistics

With a population density of more than two times that in the 1960s, it’s no surprise that housing prices are now much more expensive.

Thus, in order to make a better argument, let’s use data from 2015 till now when the population density has plateaued.


Aside from local demand, some of us love to point fingers and even make xenophobic comments upon reading articles like this:

Source: The Straits Times

Recently, there was also news of a Chinese national buying a large number of apartments for $85 million, leading to lots of heated discussions about foreigners buying up our properties.

But let’s be real, how many of us even have that amount of money for such a luxury?

In fact, if we were to look more broadly at the private market, the percentage of foreign buyers has actually decreased to three per cent of all private property transactions over the past two years, compared to five per cent between 2017 and 2019.

Moreover, the government has introduced property cooling measures and has increased ABSD rates in the private housing market to help curb demand from the rich.

Clearly, foreigners aren’t the issue here and there are other factors at play that are driving up the demand for both the public and private housing markets.

Purchasing Power

From 2015 to 2021, the median wage of Singaporeans including employer CPF contributions increased from S$3,949 to S$4,680. Moreover, the residential property assets for both public and private housing have increased over the same period of time, indicating that Singaporeans have more purchasing power and are buying up more properties.

Source: Department of Statistics

Aside from buying a property to live in, many Singaporeans are also buying up property for investment purposes, which leads to even greater demand. When properties are treated as a commodity, this can be a problem for those who really need a home and are priced out of the private market by richer Singaporeans.

When it comes to public housing, many Singaporeans are also trying to “flip” BTOs instead of treating their homes as a place to live for the long term. Once the 5-year Minimum Occupancy Period (MOP) is up, they will sell their flat and apply again for another BTO. Although there are no official statistics to prove this, I personally believe this is what’s happening when I look at the oversubscription rates for second-timers during BTO applications.

Supply for Housing in Singapore


Source: HDB

Due to the strong demand for public housing in recent years, HDB has been ramping up the production of BTO projects. But therein lies a problem, in the name itself; “Build-To-Order”.

In other words, HDB flats are only built once there is sufficient demand. While this was a great idea when there was an oversupply of HDB flats in the 90’s, what happens when there is too much demand?

We are now playing a game of catch-up.

When it comes to supply, time is an integral factor. Along with BTO delays and the slowdown of supply chains thanks to the pandemic, HDB BTO flat supplies are not keeping up with the current demand for housing.

Private Properties

Source: Parc Botannia Condo

The private market wasn’t spared either. According to PropertyGuru CEO, Hari Krishnan, there is a “massive gap opening up between demand and supply”. He also cited the manpower crunch and supply chain bottlenecks that have affected building materials.

Moreover, some richer Singaporeans may also buy private properties and keep their HDB flats to rent out once the MOP is over. This denies ownership to other Singaporeans and takes one more property off the market, which further reduces supply.

External Factors

Aside from demand and supply, there are also external factors such as the rising cost of building materials and manpower costs.

Coupled with already sky-high inflation, these factors have exacerbated housing costs throughout the public and private housing markets and will continue to do so for the next few years.

Interest rates in Singapore have also been on the rise, as the U.S. Fed raises its rates to curb inflation. These will affect housing loans from banks, and buyers can expect to pay more in interest if they are not on fixed home loans.

What Is Being Done To Curb Rising House Prices?

Most of us should already be familiar with HDB grants that help to bring the costs down for HDB units, including resale.

Over the years, various cooling measures have also been rolled out to help slow demand such as increasing Additional Buyer Stamp Duty (ABSD) rates and tightening the Loan-To-Value (LTV) limit for loans from HDB from 90% to 85% in 2021.

More recently, additional cooling measures have brought the LTV limit for HDB loans down to 80%, forcing buyers to have more cash on hand. The Government has also extended the wait-out period to 15 months for private residential property owners (PPOs) and ex-PPOs to buy a non-subsidised HDB resale flat.

Aside from these measures that “artificially” cool demand, the Government is also committed to increasing both public and private housing supply beyond 2022.


All in all, there is no one factor that is contributing to rising house prices. Rather, it is the perfect storm of inflation, rising building costs, pent-up demand, and limited supply that is causing prices to shoot upwards.

While the Government has been monitoring and putting out cooling measures, I personally feel that we are still playing catch-up. My main gripe is that housing in Singapore is treated by many Singaporeans as a commodity and there are few measures in place to prevent people from “flipping” property.

What are your thoughts on rising property prices? Share them in the comments below!

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About Justin Oh
Your average Zillennial who is obsessed with anime, games, movies and of course, personal finance. Join me as I break down personal finance into easily digestible and fun bits!
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