One of the most expensive cities in the world, Singapore recently saw hundreds of public housing apartments being sold for more than one million Singapore dollars, which is around $176,000.
This is due to the fact that construction delays caused by COVID-19 have created a shortage of housing units.
Property market thriving
There are at least two housing units that have seen their price exceed the one million mark in terms of US dollars.
Such high prices have fueled talks of the introduction of new measures by the government in order to cool down the thriving property market.
The public housing system of the Southeast Asian city-state has allowed almost 80% of people in Singapore to own their homes.
This is one of the highest rates in the world and has only happened because the system sells apartment units built by the government to citizens of Singapore directly on a lease of 99 years.
These units are often referred to as Housing & Development Board (HDB) flats and these have convenient locations.
Some of them are located near malls and train stations and facilitate a number of socioeconomic groups.
There is also a resale market because ownership can be transferred to both permanent residents and citizens within five years.
A number of apartments that were initially bought for S$500,000 are being sold for twice the amount, depending on the location and size.
The most expensive public flat that was resold this year was for a value of S$1.418 million. The flat has 92 years of lease left and the unit is spacious, spread across 122 square metres, located close to schools and train stations.
HDB flats have been used by Singaporeans for decades to either resell them for a profit, or for renting out in order to make some extra cash.
Experts believe that these flats will stay for a long time because there will always be people who wish to live in larger spaces or central locations.
In comparison to HDB flats, private condos in the same location and size can cost around S$2.5 million. These condos come with facilities like gyms and swimming pools and also have security guards.
A lot of first-time buyers of public flats have the option of applying for government loans and housing grants, which means they will not be affected by rising interest rates.
A lot of people are eager to exit the rental market, which has soared during the COVID-19 pandemic. Those who used government loans to buy flats have had to pay 23% of their monthly income for a mortgage.
There were major disruptions in the construction sector of Singapore during the COVID-19 pandemic because it relies heavily on foreign labor.
There were also delays because of tight material supplies. According to analysts, this is expected to ease up by 2023.
Even though only 2% of total transactions are million-dollar flats, about 259 housing units have been sold for more than S$1 million in the previous year.