Singapore Property Market 2021 Outlook: Will Singapore Assets Fees Maintain Going Up?

In the blink of an eye fixed, 2020 is coming to an give up.

Source: Giphy

And, I would think you would agree that the year has not been the nice, as Singapore is knee-deep in a recession.

The Ministry of Trade and Industry (MTI) mentioned in August that in the 2d zone of 2020, the economic system shrank via thirteen.2 in line with cent 12 months on yr.

In reality, Mr Chan Chun Sing, the Minister for Trade and Industry said:

 “This is our worst quarterly performance on file. The forecast for 2020 essentially approach the growth generated during the last two to three years could be negated.”

The global economic system is likewise knee-deep in a recession and nevertheless remains combating the financial disaster as a result of COVID-19.

Also, the unemployment price for Singapore Citizens (seasonally adjusted), extended from 3.3% in Q1 2020 to a few.eight% in Q2 2020.

But, there are nevertheless matters to be optimistic approximately.

Singapore has been dealing with the COVID-19 pandemic fairly well, as we will be getting into Phase three of Circuit Breaker with comfortable safe distancing control.

Our property costs have also remained resilient as in 2020m with private domestic charges higher than they had been in 2019.

Why is this taking place in the course of a recession? Will this bullishness retain?

Here’s what you want to recognise!

Singapore Property Prices Rose in 2020

We are residing in atypical times.

Typically, belongings prices have a tendency to tank whilst there is a recession.

To see this we can need to look at the Private Residential Property Price Index provided via Urban Redevelopment Authority (URA), Singapore which tracks the general fee movement of the non-public residential marketplace.

FYI: This index is primarily based on the price indices of personal residences, office, save, more than one person factories and warehouses.

Singapore’s personal assets expenses crashed after the Asian financial crisis in 1997 and the global economic crisis Private Residential Property Price Index

But curiously sufficient, Housing and Development Board (HDB) resale flat prices appear to be extra resilient to the effect of recessions.

If you take a look at the HDB Resale Price Index, prices did crash after the Asian economic disaster in 1997 and rebounded in the course of the worldwide financial disaster of 2008.

FYI: The index tracks the general charge motion of the public residential market and is based totally on the quarterly common resale rate via date of registration) of HDB resale fees HDB Residential Property Price Index

And now that we’re experiencing one in every of our maximum intense recessions for the reason that independence, you might expect that the assets marketplace can be hit just as tough.

But that’s now not the case.

Property fees are clearly rising.

Private home charges in Singapore honestly went up by means of zero.eight in step with cent quarter-on-zone in Q3 2020.

Prices of landed property rose three.7 per cent, after a flat analyzing in Q2; even as those of non-landed houses inched up 0.1 per cent, following a zero.four per cent gain in Q2.

In the same time period, HDB resale flat charges went up by way of 1.five per cent quarter-on-zone in Q3 2020.

This become the second straight region of growth in personal home and HDB resale fees, as the Singapore authorities regularly reopens the economy amidst the COVID-19 disaster.

Unemployment and retrenchment numbers in Singapore are also going up which can also have an effect on demand for assets.

Why Property Prices Might Go Down in 2021

This resilience within the non-public and HDB resale marketplace may not closing.

This is due to the fact property expenses in Singapore are being supported by means of Government measures.

Temporary Relief Measures Singapore

There has been generous help from the Government, with 4 stimulus programs that have cushioned the fallout from the global recession and COVID-19 disaster.

In 2020 we had four budgets: tge Unity Budget 2020; Resilience Budget; Solidarity Budget and the Fortitude Budget.

Also, owners breathed a sigh of remedy whilst the Monetary Authority of Singapore introduced that repayments for residential property loans might be deferred 31 Dec 2020; with banks approving about ninety in line with cent of deferment requests.

More these days, MAS introduced an extension of the relaxation measures as consistent with CNA:

Those with residential, commercial and commercial belongings loans may additionally follow to briefly reduce their mortgage payments to 60 in step with cent of their month-to-month instalments.

Those who meet the criteria can practice for the help between Nov nine this yr and Jun 30 next 12 months. Instalments plans may be quickly decreased for as much as nine months, however no longer exceeding 31 Dec, 2021.

This supplied relief for property traders relying on condominium profits, as they did not have to fear approximately finding a tenant to service their month-to-month domestic mortgage payments.

In order phrases, these property investors did not need to sell their homes out of desperation.

Arguably, these two transient measures performed element in preserving belongings expenses excessive.

But these measures are brief and there’s no assure that these measures may be extended.

Recession, Unemployment and Retrenchments

Even with the relaxation measures, shoppers could be wary because of the recession and growth in unemployment.

MAS has said on 28 October that the current recession we’re going through because of the COVID-19 pandemic is “deeper and in all likelihood to be extra protracted” than past recessions.

On 30 Oct, the Ministry of Manpower (MOM) released estimates approximately the general employment rate in Singapore.

Singapore’s normal employment fee went up to a few.6 according to cent, up 0.2 according to cent from three.4 in step with cent in August, which turned into already higher than the height unemployment price throughout the global economic disaster.

In addition, there have been more than 20,000 people retrenched yr-to-date.

This is considerable as in step with PropertyGuru, locals made up over eighty in step with cent of the belongings purchasers this yr.

Locals might be disposing of their property purchases because of all the uncertainty with the economic system and the labour market state of affairs.

But on stability, it’s far exceedingly likely that the Singapore Government will hold its efforts to guide the economy, lessen unemployment and ease the monetary difficulties caused by the COVID-19 pandemic.

There is likewise motive for optimism as well.

Post-COVID 19 Outlook

We are now seeing the mild at the quit of the tunnel as the COVID-19 vaccine is being rolled out around the arena.

The Straits Times has also pronounced that the first shipments of the Pfizer-BioNTech vaccines will arrive in Singapore by way of the cease of this yr; with enough vaccines for all Singaporean Citizens and long time residents in Singapore.

Hopefully, the pandemic might be contained sooner in preference to later.

And according to the PropertyGuru Singapore Property Market Outlook 2021 Report, there is probably more cause for optimism.

Here are a few key property developments in 2021 to pay attention to.

HDB Resale Activity And Prices Could Increase

In 2020 and 2021, over 50,000 HDB flats may have reached or will attain their Minimum Occupation Period (MOP).

About 50 consistent with cent of those newly minted resale flats entered the HDB resale marketplace in 2020. This can also have inspired the marketplace and brought about the resale charge index to grow 1.five consistent with cent in Q3 2020 on 1 / 4-on-sector foundation.

This might bode well for the non-public property as you can see these homeowners promoting their HDB flat and upgrading to a condo.

Demand For Property is Resilient

Despite the recession and developing unemployment, call for for assets remained resilient in 2020.

According to PropertyGuru, locals made up over 80 in step with cent of the belongings purchasers this 12 months.

This is tremendous as the majority of the organization can be actual proprietor-occupiers, which suggest that call for for assets will stay strong.

In addition, the savvy foreign property buyers will nevertheless hold to snap up belongings within the high neighbourhoods.

This is basically because of the relative energy of Singapore as a country our coverage transparency, protection and political balance,

Even the cooling measures like Additional Buyer’s Stamp Duty (ABSD) and the special allows required to buy landed residences which had been implemented earlier than COVID-19 did not deter them as a great deal.

EnBloc Season Incoming?

Since 2019, the assets marketplace in Singapore has seen an oversupply of personal housing.

The COVID-19 disaster did not assist matters either as while the Circuit Breaker measures have been implemented in April this yr, there was a steep fifty eight according to cent month-on-month (MoM) drop in new home income.

This become one of the worst-acting months in the last six years.

Also, the PropertyGuru Supply Index noticed a 46.4 in step with cent spike in assets listings in Q2 2020, which turned into likely because of the unsure economic outlook.

Subsequently, in Q3 2020, there has been a 32.7 in line with cent dip in the identical supply index in Q3 2020, suggesting that extra non-public residential devices had been being sold.

But, consistent with URA, there are nonetheless 26,483 unsold and/or uncompleted private residential units within the pipeline.

This would possibly have encouraged the Government to lessen the amount of confirmed Government Land Sales (GLS) this 12 months.

This ought to create an opportunity for belongings builders to revisit past unsuccessful en bloc websites to snap up land in 2021.

In fact, RL East, a subsidiary of Roxy-Pacific Holdings has already moved speedy to try this, buying a freehold 15-terraced house improvement site in Guillemard Road for $93 million in November 2020; after the en-bloc sale did now not undergo in 2018.

Low-Interest Rate Environment Favourable For Buyers

Mortgage costs in Singapore have dropped to report lows.

In the close to future, housing/loan loan hobby quotes are likely to remain low because the US Federal Reserve has committed to retaining hobby prices close to zero at least via to 2023.

As such, Singapore’s housing/mortgage loan fees that have a sturdy correlation with the Federal Reserve fees are likely to remain depressed till then.

Interest quotes for housing/loan loans have dropped to file lows.

For example, people with preexisting SIBOR home loans have been playing low-interest costs underneath 1 per cent.

However, this has not reduced housing affordability as a whole lot as banks are nevertheless required to adhere to the MAS three.five consistent with cent medium-term rate regulation to calculate debtors’ Total Debt Servicing Ratio (TDSR).

This way that some homes is probably nonetheless out of attain by using some human beings.

In other words, this low-hobby fee surroundings is beneficial for shoppers in the market for brand spanking new homes and for present owners to refinance their home loans to pay much less interest.

Singapore loan quotes are probably to remain further low till then, an environment that is noticeably beneficial for consumers seeking out new houses and existing owners to refinance their home loans.

Dr. Tan Tee Khoon, Country Manager of PropertyGuru Singapore added that:

“Property fees have remained underneath manage and comparatively stable even in opposition to the demanding situations brought forth with the aid of the pandemic. As a result, Q3 has visible an upturn in the zone, with a launch in pent-up property demand and modifications to shoppers’ conduct due to the pandemic,” introduced Dr. Tan.

“The belongings sector has continued to carry out into Q4 of 2020, and symptoms appearance encouraging as we head towards 2021. Despite the global pandemic, we can stay up for the approaching year with careful optimism.”

What Should Consumers Do?

Despite the careful optimism, consumers should still exercise warning while buying belongings due to the uncertain financial weather and sluggish projected labour marketplace recuperation.

The COVID-19 crisis has shown that we should no longer overextend ourselves with too much debt or leverage in case of conditions like this.

MAS has additionally cautioned Singaporean families to:

“be prudent in taking over new debt and in committing to property purchases as the labour marketplace healing is predicted to be protracted. Whenever possible, they ought to hold servicing or consolidating their present responsibilities to decorate resilience against surprising shocks.”

For existing owners, you should consider refinancing your housing/mortgage loans to take advantage of the low-interest-fee environment.

Also, if you are seeking to switch from your HDB mortgage to Bank Loan to take benefit of the low interest price surroundings, here is what you need to recollect:

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