March 12, 2021
The ramifications of the coronavirus outbreak have been far-reaching and numerous. Worldwide lockdowns and quarantines have disrupted most businesses, including those in real estate.
With the two-month circuit breaker measures imposed by the Singapore government to curb the spread of the virus, real estate businesses were severely affected as showflats were closed and in-house viewings prohibited. With only virtual house tours permitted, many potential buyers have been deterred from making definite purchase decisions due to their limitations in evaluating their desired properties.
Figures from the Urban Redevelopment Authority (URA) have revealed that the general price index of private homes fell 1% quarter-on-quarter in the first quarter of 2020 despite increasing for three consecutive quarters.
Upon first glance, one might be tempted to conclude that 2020 was an overall year of gloom for the Singapore property market.
Yet in the months following the lifting of the circuit breaker, data from the residential market has proven surprisingly optimistic. Data from the URA in January 2021 disclosed that a total of 1217 new private homes (precluding executive condominiums) were sold in December 2020. This number sold was the highest level for December in the span of eight years. With December being a usual quiet month for the residential market, and the overall gloomy economic outlook brought about due to the coronavirus, the increase of 57.2% in the total number of private homes sold compared to November 2020 was a breath of fresh air.
Upon closer scrutiny, we find more reasons to remain upbeat about the Singapore residential market despite economic uncertainties and movement restrictions. A total of 10,024 new private homes were sold for the whole of 2020. Take into context the fact that yearly new home sales had not exceeded 10,000 units after the introduction of property curbs in July 2018. Moreover, the 2020 figure was a 1.1 % increase from the 9,912 sales in 2019. Again, such statistics surpassed expectations one might have had during the 2-month circuit breaker that happened amidst economic uncertainty and a recession.
Many existing and upcoming trends augur well for the future of the Singapore residential market beyond 2020. With more and more investors entering the market to snap up value-for-money purchases in terms of luxury home sales, the market might witness an upturn in buying activities given pent-up demand as travel restrictions continue to keep buyers in Singapore and as currency depreciations overseas might compel foreign investors to divert their investments to stable Singapore property assets. Furthermore, competitive interest rates that would facilitate buyer affordability and a general stabilisation of the Singapore economy might encourage more sales and demand for private homes on our tiny island.
We have reasons to hope for a resilient property market in Singapore for the year 2021.