After three years of rising, Singapore housing prices have finally dropped.

The measures taken by the Singapore government to curb housing prices have proven effective, as housing prices in Singapore have experienced their first decline in three years in the second quarter.

Final data released by the Urban Redevelopment Authority (URA) on Friday showed that private residential prices in the second quarter fell by 0.2% compared to the previous quarter, which is a slight revision from the initial estimate of a 0.4% decline. However, this is the first time housing prices in the country have fallen since the first quarter of 2020. It should be noted that private property prices in Singapore rose by 3.3% quarter-on-quarter in the first quarter of this year.

According to data from the URA, although housing prices fell in the second quarter, the volume of housing transactions increased by about 16% compared to the first quarter. The number of housing sales in May reached a new high in the past year. With the launch of new development projects, the tight supply situation has eased somewhat.

Desmond Lee, Minister for National Development in Singapore, said after the data was released, "We are seeing signs of a slowdown in the real estate market, and we will continue to increase housing supply to meet demand."

The real estate boom in Singapore has also affected the public housing market. The resale price index for public housing by the Housing and Development Board reached a new high in the second quarter, rising by 1.4% compared to the first quarter, marking the 13th consecutive quarter of growth.

Morgan Stanley analysts Wilson Ng and Derek Chang believe that the slowdown in price growth is only temporary, and housing prices in Singapore will continue to rise in the second half of this year:

"We believe that the recent price slowdown was driven by the latest round of cooling measures in April, and we expect prices to rise slightly for the remainder of the year. The full-year price increase is projected to be 5%."

In recent years, Singapore has seen an influx of global millionaires, causing the Singapore property market to skyrocket and putting a heavy burden on many local residents. In order to control apartment prices, the Singapore government has implemented a series of policies to curb housing prices. In April, the stamp duty for foreign buyers was doubled, from 30% to 60%, and taxes on buyers of resale properties were also increased.

Prior to the implementation of the April cooling measures, the Singapore government had already introduced two rounds of cooling measures in December 2021 and September 2022.

Singapore Tops the Asia-Pacific Region in Housing Prices for the First Time

According to the "2023 ULI Asia-Pacific Residential Affordability Index Report" released by the Urban Land Institute (ULI), the median price of private residential properties in Singapore in 2022 was $1.2 million (approximately RMB 8.56 million), ranking first among major cities in the Asia-Pacific region.Singapore's property prices surged by 10.6% in 2021 and continued to rise sharply by 8.6% in 2022.

At the same time, Singapore's private rental housing has the highest monthly rent in the Asia-Pacific region. The median rent in 2022 reached $2,586 (approximately RMB 18,500), a YoY increase of 30%, "far exceeding" other cities such as Sydney, Melbourne, and Hong Kong.

Although private residential properties in Singapore dominate the Asia-Pacific region, they only account for about 20% of the total housing stock. According to the ULI report, the median property price in Singapore is 4.7 times the median household income, and the homeownership rate has consistently remained above 90%. Most Singaporeans live in government-built Housing and Development Board (HDB) flats.

In this sense, housing in Singapore is the most accessible, and the burden of government-built flats is the lowest.

Generally, when the ratio of median property price to median annual household income exceeds 5, it is considered "unaffordable housing." According to this standard, among the 45 cities surveyed in the Asia-Pacific region, only HDB flats in Singapore, and apartments in Melbourne and Brisbane are considered "affordable." Hong Kong's value is 26.5, a significant decrease from the previous year (30.5).