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An Interview with: Christine Sun

Christine Sun, Senior Vice-President of Research & Analytics from OrangeTee & Tie, shares her take on the Singapore property market in 2020 and her outlook for 2021.

Hi Christine, how did the Singapore property market do in 2020, a year that was filled with unprecedented events?
Singapore’s private residential property market has outperformed market expectations last year. Despite the pandemic and macroeconomic uncertainties, both demand and prices of private homes rose strongly. Based on the latest data released by URA, private home prices increased 2.2 per cent for the whole of 2020. Private home sales volume was also higher than the number sold in 2019. All these indicate that the property market in Singapore was resilient.

How was 2020 different compared to past years when there was also a global crisis?
Private home prices posted four consecutive quarterly declines during the 2008 Global Financial Crisis and 10 consecutive quarterly decreases during the 1997 Asian financial crisis. In comparison, private home prices only declined one quarter during the pandemic and subsequently increased for three consecutive quarters last year.

Uncertainties surrounding the pandemic have perhaps driven some people to withdraw their funds from more risky investments to real estate properties in Singapore. Properties here have also been well regarded as safe haven assets and are deemed to provide stable returns in times of volatility. This may explain why demand for properties is so strong in Singapore and the high demand is currently driving up prices of private homes. 

How about the luxury market specifically?
The luxury segment has done very well last year as we saw many wealthy investors snapping up luxury homes in the prime districts. Some block buster luxury home launches are expected this year. One of them is Midtown Modern, GuocoLand’s luxury integrated development situated right at the downtown core. Integrated developments are rare and highly popular among buyers due to the convenience of having amenities, transport and shopping facilities right at one’s doorstep. Many buyers are also willing to pay a premium for integrated developments.

We can expect strong buying interest for such integrated developments. With the launch of the highly anticipated Midtown Modern this year, we can expect the luxury market to pick up further this year.

What are the latest market trends in the private residential market?
This year may see the market swinging back in favour of sellers as the private housing stock is depleting. We have always been talking about the oversupply situation, but this year, we may see the opposite happening. Land sales have declined drastically in recent years as the collective sales activities came to an almost complete halt in 2018. Government land sales have also been conservative over the past years. With a healthy net absorption of new homes over the last three years, the higher take-up numbers against a conservative supply have resulted in fewer unsold, uncompleted private homes. The cumulative unsold units may be nearing its peak and may start tapering this year. As many expect the global economy to recover this year, coupled with a lower supply of new homes, prices of properties may continue to rise this year.

Do you foresee the luxury market doing better when foreign high-net-worth individuals can travel after borders are reopened eventually?
Yes, travel restrictions are expected to ease further as more countries roll-out their massive inoculation programmes. Demand for luxury homes are likely to increase in tandem with more foreigners coming into Singapore

What about trends in terms of buyer’s lifestyle or personal preferences?
We have noticed an increase in sales of bigger homes especially those above 1,200 sqft private homes in recent months, which are the typical 3, 4 bedrooms or penthouses. Perhaps many buyers need more space as they are expecting the work from home to continue beyond the pandemic. And they are expecting prices to rise so it makes more sense to buy a bigger unit now.

For smaller families, there is also a shift towards luxury properties. This may be because people see the value and quality of these luxury properties and are willing to pay a premium for them.

Midtown Modern is one of the highly anticipated launches of 2021.

Now for a little crystal ball gazing. What is your view on the market outlook for 2021?
Singapore’s housing market will continue to benefit from the ample liquidity still circulating in the system. The huge influx of capital from the massive quantitative easing programs will continue to flow offshore to financial systems and real estate markets worldwide. With cheaper borrowing costs, buyers flushed with cash will continue to hunt for properties in the coming months.

We may expect demand for private homes to remain resilient this year. Buyer sentiment is likely to improve further on the growing vaccine optimism and global growth. We expect overall home prices to rise further by 2 to 5 per cent in 2021 and new home prices may similarly increase up to 5 per cent. Between 19,200 and 21,200 private homes could change hands, slightly higher than the number inked in 2020. Of this number, around 9,000 to 10,00 new homes could be sold this year.


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