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Singapore Real Estate – Strong Essential Demand Unstoppable Even by the Pandemic
Despite the tightening of COVID-19 management measures in May and June 2021, the private residential market remained robust in the second quarter of 2021. Although safe management measures restricted viewing activities and had some impact on the launch of new private residential projects this quarter, transaction volumes and prices remained at a relatively healthy level.
According to market observers, buyer confidence has generally remained intact, driven by the economic recovery and a more optimistic outlook for Singapore’s economy. Looking ahead, home sales across all segments, namely new private home sales and resale private homes, are likely to exceed the sales figures from 2020.
Insights from Singapore’s Property Transaction Volume
Developers sold a total of 2,966 new private homes this quarter (excluding Executive Condominiums, or ECs), a 15.1% decrease from the 3,493 units in Q1 2021. The decline in new private home sales was mainly due to a lack of new development launches, as developers chose to delay their launch plans until after Phase 2 (Heightened Alert). Compared to the same period last year, the 2,966 new private homes sold in Q2 2021 were 73% higher than the 1,713 units sold in Q2 2020.
Meanwhile, the resale market performed exceptionally well in Q2 2021, with 5,333 resale private residential units changing hands. This is the highest quarterly resale figure since 5,809 resale units were sold in Q3 2009.
The total transaction volume for private homes in Q2 2021 was 8,449 units (including new sales and resales), but the volume of sub-sale transactions remained relatively low at 150 units.
Singaporeans accounted for 81.9% of non-landed new private home sales in Q2 2021, slightly lower than 82.9% in Q1 2021. Meanwhile, the proportion of foreigners purchasing non-landed new private homes rose from 4.2% in the previous quarter to 4.9% in Q2 2021. The slight increase in foreign demand may be due to the launch of several new private residential projects in the central region during the second quarter.
How Are Singapore’s Property Prices?
The growth in private residential property values slowed in Q2 2021. According to the URA Property Price Index, private home prices climbed for the fifth consecutive quarter, rising by a modest 0.8% quarter-on-quarter in the second quarter, down from the 3.3% increase in the previous quarter.
The price increase in the second quarter was driven by the non-landed private residential market, which grew by 1.1% quarter-on-quarter, with all three regional sub-markets seeing increases. The Outside Central Region (OCR) saw the highest growth at 1.9% quarter-on-quarter, followed by the Core Central Region (CCR) and the Rest of Central Region (RCR), which achieved quarter-on-quarter growth of 1.1% and 0.1% respectively.
Meanwhile, landed property prices fell by 0.3% quarter-on-quarter, a reversal from the staggering 6.7% increase in Q1 2021.
New projects launched in Q2 2021 were introduced in April and May, as developers postponed June launches under the Phase 2 Heightened Alert (P2HA) measures.
Projects in the central region dominated new launches in Q2 2021, with Irwell Hill Residences and One Bernam receiving a positive response from buyers.
How is the Private Residential Rental Market?
- Housing rental demand remained robust in Q2 2021. According to the URA’s rental index for private residential property, rental volume rose by 2.9% in Q2 2021, following a 2.2% increase in Q1 2021.
- The non-landed residential market drove the growth in rental volume, with a 3.1% quarter-on-quarter increase, while the rental volume for landed properties rose by 1.4% quarter-on-quarter.
- As working from home remains the default arrangement, this has prompted people to look for larger homes, thereby driving rental demand. Tenants seeking temporary accommodation due to delays in the completion of new homes also contributed to the rental demand. Consequently, landlords may find themselves in a better position to ask for higher rents.
- There were a total of 23,536 rental contracts in Q2 2021, 0.4% fewer than the 23,622 contracts in the previous quarter. In terms of rental value, the total value of rental contracts in Q2 2021 was S$91.5 million, an increase of 2.5% from the previous quarter (S$89.3 million).
Private Residential Market Outlook
- As Singapore re-entered P2HA from July 22 to August 10, this may have brought some uncertainty to developers’ new project launch activities for the next quarter, but it is not expected to have a significant impact on demand or prices.
- Singapore property investment planner, Kevin Guo, expects private home values to climb by 6% to 7% in 2021. Healthy demand for residential properties and a reduction in unsold inventory will help support home prices. As of Q2 2021, there were 19,834 unsold units (excluding ECs).
- Kevin Guo further stated, “Barring any new cooling measures, I expect between 11,000 to 12,000 new private homes and over 16,000 resale units to be transacted for the full year of 2021.”
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