Housing market demand to remain resilient next year

23 Dec 2020

The property market ‘roared back to life’ following the end of the circuit breaker period in June, and the buying sentiment is expected to improve further on the back of growing vaccine optimism, says OrangeTee. 

Singapore property market’s long-term prospects will continue to be positive as the city-state’s key fundamentals remained intact in spite of the COVID-19 pandemic, said OrangeTee.

For instance, its pro-business environment, excellent education and healthcare standards, political stability and safe-haven status is expected to continue attracting investors around the world.

The ample liquidity circulating within the system will also help boost Singapore’s housing market.

“Governments and central banks around the world have enacted comprehensive fiscal programs and stimulus packages to counteract the disruptions caused by the pandemic,” noted OrangeTee. 

“The huge influx of capital from the massive quantitative easing programs is flowing offshore to financial systems and real estate markets worldwide. With cheaper borrowing costs, buyers flushed with cash have been hunting for properties in recent months.” 

Recommended article: Singapore Property Market Outlook 2021 Overview

In fact, the property market ‘roared back to life’ following the end of the circuit breaker period in June, with total number of transactions, excluding executive condominiums (EC), soaring 164.5% to 7,047 units in Q3 2020 from Q2 2020’s 2,664 units.

OrangeTee expects buying sentiment to improve further on the back of growing vaccine optimism and the city-state’s entry into Phase 3 reopening.

“We expect overall home prices to rise further by 1 to 4% in 2021, while between 19,200 and 21,200 private homes could change hands, slightly higher than the number inked in 2020.”

However, it expects fewer new project launches next year, with about 20 new developments forecasted to be launched in the first half of 2021. 

“There will be fewer project launches next year as most mega projects have already been launched over the past two years. Further, the number of projects launched from the 2017-2018 spate of aggressive land deals have already neared its peak and is expected to taper from next year,” said OrangeTee.

Suggested read: 19 New Launch Condos and ECs in 2021: Which to Buy?

Among the blockbuster launches to watch out for next year include the luxury projects at Park Nova (former Park House), Normanton Park, former Liang Court, Klimt Cairnhill (former Cairnhill Mansions), Midtown Modern as well as the site at Irwell Bank Road.

Mass market projects that are set to be launched include the government land sites at Fernvale, Pasir Ris and Canberra.

OrangeTee does not expect new home prices to fall in 2021 as “market sentiment will improve in response to the better economic outlook”.

“While some projects may continue to experience some impact from the recent curbs on the re-issuing of option to purchase (OTP), others could see healthy demand as a result of the diminishing supply of choice sites,” it said.

It expects new home prices to increase at a faster pace of between 2% and 5% in 2021, with about 9,000 to 10,000 units sold, excluding ECs.

Demand for resale homes is also forecasted to moderately increase by around 5% to about 10,000 to 11,000 units in 2021, with prices climbing by 1% to 4% next year.

Suggested read: New Launch Property vs Resale Condos in Singapore: Which is Better?

Meanwhile, the HDB resale market posted a stellar performance in 2020, with prices increasing 1.5% quarter-on-quarter in Q3 2020 despite the pandemic and rising supply of flats.

OrangeTee believes the long waiting completion period of recent BTO launches may have diverted some demand to the resale market. 

“As the completion period for November BTO launches is expected to be long, couples with immediate housing needs will likely turn to the resale market in the coming months,” it said, adding that the weak employment market and macroeconomic uncertainties may have also caused more families to downgrade to HDB flats. 

“As such, we anticipate that resale volume may rise 3% to 5%, to around 24,000 to 26,000 units. Prices of resale flats may continue to rise by 2% to 5% in light of the higher demand,” added OrangeTee.

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