Ukraine-Russia War: How does it impact Singapore’s Property Market

As Covid-19 turned 2 years old in December 2021, we thought 2022 would be a better year as we hoped it becomes endemic. 10 days after valentine’s day, Russia declared war against Ukraine. Share indexes were a sea of red and commodity prices increased. Coupled with the fact that the economy was still recovering from Covid-19, the war couldn’t have come at a worse time. Investor’s confidence were shaken and the US Federal Reserve (Fed) announced that they will be increasing interest rates to curb inflation.

With material, energy and labor costs rising, it’s only natural that we expect property prices to increase since these are tagged to the overall construction cost.

And if you think there is an oversupply of private residential units in the market, you may want to reconsider that thought. Decreasing land supply, rising land bid prices and rising construction costs leads us to only one outcome — rising home prices.


  1. The impact of wars on Singapore’s property market is not as great as government interventions or financial crisis.
  2. Rising construction costs is here to stay but we should be more wary of rising land bid prices.
  3. Regardless of your purchase — investment or own-stay, buyers should always be prudent and avoid overleveraging.

The Impact of Wars are the Least of Our Concern

Impact of Geopolitical Events on S&P500 (Source: LPL Research, S&P Dow Jones Indices, CRFA, 01/06/20)

Looking at how the stock market reacts to geopolitical events, it is safe to say that with every geopolitical event, the stock market takes a dip. But one thing for certain is that with every dip, the stock market recovers stronger than ever.

Singapore Private Property Price Index Jan 1975 — Mar 2020 (Source:

Scrutinising Singapore’s private property price index (PPI), we observe that dips in the PPI were largely due to government regulations and financial crisis rather than wars. Nonetheless, these dips were transient just like the stock market. The underlying reason for the PPI rebounding is due to rising land bid prices. This is evident from the recent government land sales at Dairy Farm Walk and Bukit Batok West.

At the time of writing, the latest new launch — Piccadilly Grand at D8, received an overwhelming response. Selling out 78% of their units within 2 days of launching at an average psf of $2200, this is a strong indication that buyers in today’s market are receptive of the current prices. Pricing for upcoming new launches at Northumberland Road and Ang Mo Kio Ave 1 will most likely follow suit.

Rising Construction Costs

Source: Rider Levett Bucknall’s Construction Market Update Dec 2021

Tender Price represents the price for which developers are willing to pay for the land itself. It does not include construction costs. In general, there is an upward trend for tender prices except for a dip in 2017–2018 due to the en bloc fever.

Source: Rider Levett Bucknall’s Construction Market Update Dec 2021
Source: Rider Levett Bucknall’s Construction Market Update Dec 2021
Source: Rider Levett Bucknall’s Construction Market Update Dec 2021

We note that material costs were increasing steadily even before the Ukraine-Russia war mainly due to Covid-19. Construction costs is therefore likely to continue increasing, whether the war persists or not. If anything, material costs would increase at a faster rate should the war persist. After all, Russia is one of the world’s main oil producer and supplier of metals (nickel, copper and iron). That being said, property prices would inadvertently increase. However, developers are also hit with the dilemma of passing all costs to consumers for fear for failing to sell out all units within 5 years of obtaining the land.

Avoid Overleveraging and do your Due Diligence

The Ukraine-Russia war has dragged on for about 2 months now. It is only natural that this brought about inflation across the world which is commonly curbed by interest rate hikes. Last week, the Fed increased interest rate by half a percentage point, waking property investors up from their 2-year dream of low interest rates. On the bright side, the interest rate hikes are likely to be gradual since an immediate increase would result in the US depleting their reserves to pay off its national debt.

This has dampen the demand for housing in Singapore as investors and upgraders wait for prices to dip before entering. If anything, we learnt from the past that with every cooling measure, comes a dip in property prices before they rebound. However, as mentioned earlier, the current market is facing a shortage in supply. Since the supply for property is highly inelastic (due to construction time), it will take a lot more than just a mere fall in demand for prices to remain stagnant or even decrease. In addition, the benchmark for new launches in 2022 will be around the $2000 psf mark as witnessed from the good response rate for Piccadilly Grand.

While we aren’t able to control factors such as rising land bid prices and interest rate hikes, it is more imperative to make sound investment decisions — which I will touch on in a separate article.


As a note, it wouldn’t be advisable to time the market because year-on-year, property prices invariably increases. When interest rates were at an all-time-low 2 years ago, everyone knew it was not going to stay forever. Similarly, the sad truth is that property prices will continue to increase because there just isn’t much land space available. Coupled with the fact that Singapore’s population is projected to hit 6.9 million by 2030, there just isn’t much evidence to fight a case for property prices to decrease in the future.

As we head into an inflationary period, it would be wise to invest in assets that helps us hedge against inflation. Thankfully, Singapore’s government actively regulates the property market to ensure property prices appreciate at a steady pace. The fact that an asset bubble is never formed makes property in Singapore a safe haven for both local and foreign investors.

I hope this article serves purposeful in helping you make a more well-informed decision, regardless of whether you’re purchasing a property for own-stay or investment. As always, feel free to share your opinion in the comment section and I will take time to address them when I can. Till next time!



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manfred lau

manfred lau

Real Estate Agent based in Singapore sharing bite-sized content while trying to keep it light. If you’re reading my stories, I hope you enjoy them!