Singapore's mortgage costs are rising — but some buyers are shrugging off higher rates
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- 31 Oct 2022
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The rising cost of borrowing is unlikely to have a major impact on Singapore’s property market, analysts told CNBC.
That’s because of several factors such as wealthy buyers, strong rental demand and foreigners moving to Singapore.
Singapore’s real estate market is backed by wealth, according to Christine Li, head of Asia-Pacific research at Knight Frank. That means it’s similar to markets such as Shanghai and Beijing, where a lot of people buy properties with a small loan or without borrowing at all, she told CNBC over the phone.
Countries like Australia and New Zealand have a different dynamic, she added. In those markets, “people buy their homes because of income growth, so when interest rates start to hike, you can see that the reaction … is a lot more immediate.”
Fixed home loan rates from Singapore’s major banks have climbed as high as 3.85%, according to local media reports.
But in wealth-backed markets like Singapore, interest rates don’t “move the needle,” Li said, “because these people in the first place don’t even rely on borrowing to fund these homes.”
One property agent told CNBC last year that all-cash offers were on the rise at that time.
Interest rates are “not going to be a determining factor for prices to come down,” Li said. “I think you need something that is a lot stronger, especially from the macro side, for people to realize that entering a market at this kind of price level may not give them the returns they want.”
Christine Sun, senior vice president of research and analytics at OrangeTee and Tie, said buyers in the top wealth bracket in Singapore have enough money to fund their house purchases, or can redeploy capital to pay for their loans. Read More…
