To say 2020 was an unprecedented year is an understatement — the PropertyGuru Singapore Property Market Outlook 2021 looks back on the momentous happenings and events that have impacted the property sector this year, pulling together key data and expert insights to predict what’s in store for 2021.
Read the full report online or download a copy for later.
Want a quick snapshot of the PropertyGuru Singapore Property Market Outlook 2021? Here’s a handy overview of our key findings and insights.
- Looking Back at 2020
- Key Trends That Will Impact The Property Sector In 2021
- New Projects Expected In 2021
- Conclusion: Is 2021 the Year to Buy or Sell a Property?
A key defining event of 2020 was the COVID-19 outbreak. The infamous “circuit breaker” measures affected the property market hugely: showflats were shut, physical viewings were disallowed and construction works (and hence uncompleted projects) were delayed. April 2020 very quickly became the worst performing month for the sector in close to six years.
Although the market quickly rebounded in the second half of the year, buyers and sellers remained cautious. Affordable properties in the Rest of Central Region (RCR) and Outside Central Region (OCR) and priced between $1,000,000 to $1,500,000 consistently saw the most interest and performed the best.
Mortgage rates also hit record lows after the U.S. Federal Reserve slashed interest rates to near-zero and launched a $700 billion stimulus package in response to the pandemic in March 2020. In Q3 2020, the three-month SIBOR (3M SIBOR) fell under 0.5%, as opposed to about 2% in Q3 2019.
Those with existing Singapore Interbank Offered Rate (SIBOR) home loans benefitted the most, enjoying rates as low as under 1%. The current low-interest rate environment is also very favourable for buyers in the market for new homes and existing homeowners looking to refinance their home loans.
On the supply side of things, the private housing glut from 2019 remains. As of Q3 2020, there were 26,483 unsold uncompleted private residential units in the pipeline. This overhang, coupled with the COVID-19 fallout, resulted in the Government cutting back on confirmed Government Land Sales (GLS) sites in 2020.
Finally, to round off the year, the Controller of Housing (COH) announced a new restriction on reissuing purchase options for the same unit to the same buyers. As expected, there was a slight softening in the first two weeks of October, but developer sales began to pick up briskly in November.
For a recap of how the Singapore property market performed each quarter in 2020, read our Property Market Index reports:
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COVID-19 has sparked a shift in property buying habits, and we expect these trends to persist as the nation embraces the “new normal”. Buyers are likely to remain price-sensitive and open to larger homes in suburban districts which are more value-for-money.
Additionally, with more new resale flats entering the secondary market in 2021 — a total of 50,000+ units would have reached or will reach their Minimum Occupation Period (MOP) this and next year — HDB resale flat prices may continue to rise. A similar trend was observed this year when HDB resale prices rose by 1.5% quarter-on-quarter (QoQ) in Q3 2020.
The buying market will continue to be dominated by locals, which made up over 80% of the property purchasers this year. As this group consists mainly of genuine, owner-occupiers, the demand is likely to stay resilient.
Of course, the seasoned foreign investors will continue to invest in the prime districts because of the nation’s sound fundamentals, policy transparency, safety and political stability. There is nothing in their way of investing in Singapore property, with the exception of the Additional Buyer’s Stamp Duty (ABSD) and permission required if they wish to buy landed properties, but those restrictions were already in place prior to the COVID-19 pandemic.
With the Government cutting back on land supply, developers may take 2021 to revisit past failed en bloc sale sites to replenish their land banks. Hence, we may observe an en bloc season next year.
On the home financing front, the Federal Reserve has announced that they will keep interest rates near zero, at least until 2023. As such, we expect Singapore mortgage rates, which are closely correlated to fed rates, to similarly remain low until then.
Financial institutions may also start launching Singapore Overnight Rate Average (SORA) packages in parallel with SIBOR home loans next year to start educating consumers on the new benchmark rate, how it works and how it affects them. SORA recently replaced the Swap Offer Rate (SOR) and looks sets to gradually replace SIBOR over the next few years as well.
Even though some developments that were originally planned for this year were eventually postponed to 2021, the number of new launches in 2021 remain fewer than 2020. Here is an overview of the new projects expected next year.
2021 is likely to remain a buyer’s market and we look to the coming year with cautious optimism.
Housing demand is likely to remain resilient in 2021, but prices are expected to stay stable. Even if encouraged by strong demands, in view of economic uncertainties, sellers and developers will take a sensible approach and price properties in accordable to the market.
Of course, what lies ahead is highly dependent on the global COVID-19 situation and how soon we recover from the pandemic, but based on the sector’s performance in 2020, the signs look encouraging.