Outlook for Private and Public Housing Markets in Singapore Expected to Improve in 2021

SINGAPORE, 22 January 2021 – One year on, the pandemic has wrought many changes in Singapore’s property market. Despite the uncertainties, the public and private residential property markets recovered and ended 2020 on a positive note. The HDB resale price index has increased steadily last year, ending the year at 5.0% higher than 2019. At the same time, the private housing price index also appreciated at an accelerating pace in 2020.

HDB resale price and volume surpassed pre-pandemic levels; the rental market badly affected
HDB resale price index in 4Q 2020 expanded 3.1% quarter-on-quarter (qoq), faster than the preceding quarter. Despite the Covid-19 pandemic, the HDB resale transaction volume in the last three months of 2020 was remarkably healthy. The number of HDB flats sold in 4Q 2020 was 20.6% higher than the corresponding period in 2019, despite it slipping 1.9% qoq.

The HDB rental market, on the other hand, has taken a hit due to the slowdown in the local economy and employment market. In the fourth quarter of 2020, a total of 8,472 HDB flats were rented out. This was 29.9% lower than the HDB rental volume in 4Q 2019. For the whole of 2020, the HDB rental volume contracted 19.5% yoy to 38,798 flats. This the largest rate of decline since such data was made publicly available in 2006.

Private residential property price trend
According to the latest real estate statistics released by the URA, the Singapore private residential property market had survived the pandemic relatively unscathed. The private residential property price index increased 2.1% quarter-on-quarter (qoq) and 2.2% year-on-year (yoy), surpassing the pre-pandemic price level.

Performance for Private housing primary market and residential rental market
The private housing primary market had turned in the best performance for an October to December quarter since 2012 as the number of new private homes sold reached 2,603 units. Despite launching relatively fewer housing units in 2020 compared to the preceding year, real estate developers sold a total of 9,982 private housing units, a marginal 0.7% more than the dwelling units sold in the year before, signalling that the primary market had survived the pandemic fairly well.

The private residential rental index ended the year with a slight 0.1% qoq expansion. On a yearly basis, the rental index decreased 0.6% compared to 4Q 2019, likely due to landlords being more willing to rent out their units at a lower rate in order to avoid vacancies, given the weak rental market sentiment.

Outlook for property markets in Singapore
In 2021, the key factors that will influence the private and public housing markets in Singapore would be the expected economic recovery and subsequently, the recovery in the employment market. In addition, the implementation of the vaccination programme would also improve confidence in the real estate market. Gradual easing of travel restrictions might lead to more foreign buyers and investors coming back to.

Although the HDB resale price index ended 2020 with an impressive rate of growth, it was still 7.5% lower than the peak of the price cycle in mid-2013, which means that there is still room for expansion. As the Singapore economy and job market are expected to improve in 2021, it would add to the growth momentum for housing prices and resale volume. In addition, the delay in the construction of new HDB flats would also push some first-time homebuyers to the HDB resale market.

Developers may have fewer residential projects available for launch this year compared to 2020. About 10 of the 25 projects expected to be launched in 2021 are located in the Core Central Region. Therefore, the limelight in the primary market in 2021 would shift to the prime residential districts.

As the job market improves, more foreign professionals would come to Singapore. Furthermore, international students would also return to Singapore to resume on-campus study. This would increase residential leasing demand, resulting in a gradual recovery in residential rental rates and transaction volume.

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