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.
Looking back at 2020
The 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 were delayed. April 2020 very quickly became the worst performing month for the sector in close to six years.
It was not until when the circuit breaker measures were lifted in June 2020 that we saw the market rebound; pent-up demand saw sales picked up quickly month-on-month, culminating in September — where sales reached a two-year dizzying high. Properties in the Rest of Central Region (RCR) and Outside Central Region (OCR) saw the most interest and performed the best.
Also in September, the government decided the step in to clamp down on the reissuing of Options to Purchases for the same unit to the same buyers. This meant that developers could no longer reissue options to buyers to extend the purchase window and ultimately, distort property transaction figures. As a result, we saw a 51.7% month-on-month drop in property sales in October (although the lack of new launches also played a part).
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.
The government also launched a series of relief measures to support homeowners struggling with their mortgage repayments. Homeowners could defer their mortgage payments until 31 Dec 2020. Those who saw a 25% cut in their monthly incomes could also apply to repay 60% of their monthly mortgage repayments for up to nine months (up to December 2021).
Key trends in 2021
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.
Whether you’re a buyer, seller, investor, or just curious about the property market in 2021, our Singapore Property Market Outlook 2021 Report details the key trends that will unfold in the year ahead. Read the full report online or download a PDF copy.