top of page

Effects of COVID-19 on Singapore property market

Updated: Sep 1, 2021

We are all aware by now that COVID-19 has some great impacts on our everyday life - hand sanitisers, masks and so on. But, how has it impacted our local property market? What are the causes and how will it trend from here on?

Image: Unsplash

Here's a lowdown of what's happening to the property market in Singapore.


Image: Unsplash

Private home prices rose by 7.3% over the last 12 months. It had risen consecutively for 5 quarters by a more sedate 0.9% in 2Q2021 compared to 3.3% in 1Q2021 (steepest quarterly price increase since 2Q2018).

What has led to the price increase?

  • Labor crunch led to bottlenecks and disruption in construction projects.

  • Mortgage interest rates dived as a result of US Federal Reserve’s cut which impacted local interest rates.

  • More HDB owners are upgrading to affordable private properties as their HDBs have reached MOP or are going to.

  • Landed housing segment saw an increase in prices of 6.7% in 1Q2021 vs a 2.5% increase in non-landed private housing.

  • Limited injection of land via Government Land Sales and enbloc in 2020 saw unsold housing inventory dipped. More developers are shoring up on their land bank leading to more competitive tenders.

  • The widening price gap between new and resale homes has fuelled higher demand in resale properties.

The overall volume of private property sales in 2020 has also surpassed 2019 with:

  • 9,982 NEW homes sold (0.7% year-on-year higher)

  • 10,729 RESALE homes sold (19.9% year-on year higher)


Image: Unsplash

HDB resale prices rose 4.8% in 2020 compared to an increase of 0.1% in 2019. HDB resale prices had increased 13.2% from June 2020, and are currently just 1.7% off the peak in April 2013.

What are some of the main contributors to this trend?

  • Construction delays plaguing BTO projects have been a major pull factor to encourage buyers to consider resale flats instead.

  • HDB upgraders with MOPed HDBs looking to move into a larger HDB flats.

  • With robust housing demand and supply shortage, bargains are fading as eager buyers are willing to match valuation or pay Cash Over Valuation (COV).

  • Government stimulus measures such as Jobs Support Scheme ensured most employees with job and income stability.

  • Private homeowners downsizing, looking to cash out for their retirement.

In 2020, Singapore saw a record eight-year high on the volume of resale HDB transactions. Not only did prices go up, resale HDB transactions also went up by 4.4% to 24,748 units in 2020, from 23,714 units in 2019.


Image: Unsplash

Properties in the Outside Central Region (OCR) increased 1.8% in 2020. OCR homes are outperforming the rest of the regions because:-

  • Properties in the OCR are the most affordable.

  • Attracts the widest demand base of HDB upgraders.

  • Increasing work-from-home and home-based learning needs have led to a preference for larger apartments in the OCR/RCR (rest of central region) compared to smaller apartments in CCR (core central region).

  • Dropped in supply of overall housing supply due to construction delays and labour crunch.

  • Cities like Hong Kong, New York, and Seoul are also experiencing similar shifts in demand during the pandemic, suggesting that the increased demand for real estate outside of the city centre is a global phenomenon.


Image: Unsplash

SRPI (Singapore Residential Price Index) by NUS (National University of Singapore) for small units had the lowest rate of annual growth, which increased by 0.2% y-o-y. Furthermore, the proportion of transactions for bigger homes rose in 2Q2021.

  • As we spend more time at home due to COVID-19, we appreciate the value of space at home. Homeowners now seek homes with outdoor space or additional areas for recreational activities such as home workouts.

  • With adoption of work from home (WFH) and home-based learning (HBL), homeowners see a need to adapt their living spaces for better efficiency. Buyers now take flexible spaces into consideration when looking for a new home. The combination of clever designs and functional smart furniture allow homeowners to maximise their space efficiency at home.


Image: Unsplash

We see an overall upswing in the local rental market. How is this so?

  • Delays in construction for private properties and public housing projects - Buyers rent while waiting for their new homes to be ready are also willing to pay a slightly higher rent in exchange for a more flexible lease term.

  • Work demands - More people have chosen to move out to stay on their own in order to enjoy more space and privacy, especially with the increasing WFH demands.

  • Returning Singaporeans & PRs - With the improving situation in Singapore and progressive changes in border control, more are returning to Singapore and many require short to mid-long term accommodation arrangements.

  • Growth in Singapore’s economy - Early economic indicators pointing to stronger-than-expected GDP growth for 2021 intersects with the underlying rental demands. There are also signs of recovering employment in some industries, such as technology and manufacturing.

  • Adaptation to digital technology - Proliferation of technology in today’s market, such as virtual viewing, has helped to mitigate some of the adverse impact and deals can still be closed contactless.

So, what does all these come down to?

Prices will likely increase as analysts expect intense competition for land, which may, in turn, further fuel price hikes. Given the uncertainties, coupled with construction delays, buyers may decide to act now.

Though the market is not ‘overheated’ now, MAS remains ‘highly vigilant’. Possible cooling measures may kick in to balance and ensure that the property market does not get ahead of underlying economic fundamentals.

Given the confidence in Singapore’s government in handling the pandemic situation and reopening of borders in the coming months, we see a gradual return of foreign demand.

The pandemic has altered what homeowners and home seekers need for their home. This has reshaped new property developments as there is now more emphasis in ensuring that buyers’ needs for rest, work and activities can be met within the same space.

Still unsure of what to do? Connect with me today to discuss!


Os comentários foram desativados.
bottom of page