Work from home in Singapore has become a mainstay since the COVID-19 pandemic hit us in January 2020. It has had a huge impact on our day to day lives in Singapore, and not just because we now have to wear masks everywhere. Working from home has become the norm rather than the exception. In 2021, property buyers’ needs have shifted and impacted the way we choose to buy or rent.
For a long time, “location, location, location” was the mantra of prospective property buyers and investors, often trumping other concerns such as size. The sky-high prices in the city core reflect the premium that a central location has been able to command.
But with fewer people having to commute to work these days, patterns of demand look to be shifting. It’s hard to predict if this behaviour will persist, but there are signs of more buyers preferring larger homes in less central areas.
Demand Is Moving Away from the Central Region
In fast-paced Singapore, property buyers have been willing to pay a premium for being able to get to the city centre in as little time as possible. The high price of cars has in all likelihood boosted further the demand for homes that are well-connected to the city centre by public transport.
As a result, properties in or near the central region have traditionally commanded high prices. A property’s connectivity by public transport also typically has a significant impact on its value, with homes located close to MRT stations enjoying higher demand.
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But reduced commuting, thanks to working from home and flexible hours, is already shifting patterns of demand. Workers’ willingness to pay a premium in order to reduce commuting time falls as they shift to remote work.
The trend of decentralised work looks set to reduce demand for properties in or near the Core Central Region (CCR), which until now has seen elevated rents and property prices. We predicted in our Singapore Property Market Outlook 2021 Overview that buyers would be open to larger homes in suburban districts as they are more value-for-money.
Early signs of shifts in demand have appeared. The price index for private residential property in Q1 of 2021 by URA showed an increase in prices of non-landed private residential properties in the CCR by 0.5%, as compared to 3.2% in the previous quarter.
Comparatively, prices of non-landed properties in the Rest of Central Region (RCR) increased by 6.1%, as compared to the 4.4% increase in the previous quarter.
Falling demand for homes in the CCR has translated to higher demand for homes in the RCR and the Outside Central Region (OCR). This can be observed via asking price growth in the PropertyGuru Singapore Property Price Index (SPPI).
The SPPI tracks asking prices in the non-landed private residential market. In Q1 2021, the 5 best-performing districts with asking price growth were:
This is just the start of what could be a massive change in property consumption patterns. In the coming years, a growing number of businesses might move their premises away from the CBD, finding that they no longer need large swathes of office space in a central location.
Greater Demand For Spacious Homes
Singapore residents have long been willing to sacrifice a bit of space for the convenience of an easy commute. After all, many are used to spending more time at the office than they do at home.
But the pandemic has accelerated a shift in working and school-going patterns to work from home and home-based learning arrangments. And some have discovered that their homes are ill-equipped to double up as offices and study spaces.
Space is scarce in Singapore, with the average 4-room HDB flat measuring about 90 sqm. Based on the average household size for such flats, each person only has about 28 sqm of space.
The layout of the typical HDB flat does not help either, as it tends to consist of small bedrooms in order to free up space for the living and dining area. In a household in which multiple people are working or studying at home, this presents problems of space allocation, as those who need a quieter environment for videoconferencing or e-learning have to retreat to cramped bedrooms.
As working from home becomes the norm, there could be greater demand for more spacious homes that can accommodate multiple workspaces.
More buyers are looking for bigger homes amid the pandemic. Some have sold their condominiums to acquire larger public flats.
According to Nicholas Mak, Head of Research and Consultancy at ERA Realty, when comparing data from pre-pandemic 2019 and after the circuit breaker period (from Q3 2021 to Q1 2021), bigger HDB resale flats have become more sought after. For instance, average quarterly sales during this period soared by 34% for bigger resale flats, with five-room and executive flats reporting an average quarterly sales increase of about 40%. Comparatively, sales for smaller resale units climbed only 18% across the same period.
Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, reports a similar trend for the purchase of bigger houses in the private property sector. In the private property sector, sales for new homes sized above 1,200 sq ft increased from 362 units in Q4 2020, to 623 units in Q1 2021. This is a 72% increase for non-landed, landed property and executive condominiums.
Due to WFH arrangements seemingly here to stay, households may place more importance or be willing to spend more on homes with more spacious bedrooms, or additional bedrooms which they can convert into a home office or study room.
With the average person spending more time at home than ever before, having a more spacious abode could also become a bigger lifestyle aspiration than being able to live in the city core.
Spending on HDB flat renovations and home furnishings is also likely to pivot to reflect these changes in preferences, as people start to prioritise home offices as well as lifestyle-related facilities, with more residents turning to home entertainment systems and setting up home gyms.
Our other predictions on how property buyer behaviour is changing also include a preference for quiet neighbourhoods over bustling areas, closeness to nearby parks and/or greenery, as well as accessibility to amenities.
Working from Home Is Likely to Shift Priorities from Location to Space
As more and more people opt for city fringe or suburban areas and spend more time in residential estates rather than the CBD, businesses are likely to relocate, too.
This could lead to an equalising of prices in central and suburban areas and accelerate the government’s attempts to encourage decentralisation.
While residential estates look set to become more vibrant, the CBD is likely to continue to experience falling property values as businesses relocate away from the city centre. As prices fall, the city core could become more accessible to residents, transforming the CBD into a mix of offices and residences.
Learn more about what we can expect in the next half of 2021 by reading PropertyGuru’s Singapore Property Market Index Q2 2021 or watching our webinar on whether we can expect another round of cooling measures in H2 2021?
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