Updated: Nov 15, 2020
We all know that COVID-19 has impacted Singapore’s economy since Q2 this year. With the Circuit Breaker period that began in April and ended in June, many of us grew worried about what was to come - or go (outbreak, be gone!).
Still, a majority of Singaporeans adjusted to the new normal by enthusiastically documenting their exercise regimes and Masterchef videos at home. Eager property buyers leveraged virtual avenues to conduct virtual presentations and show flat viewings.
Transaction volumes have taken a hit as a result of COVID-19. Home buyers and investors were more cautious and mostly waited it out, at least until Phase 2 of Circuit Breaker, when businesses were allowed to resume. This caused an expected surge in property sales in June.
Overview of PropertyGuru’s Singapore Property Market Outlook Q3 2020 Report
The report examines what happened in the residential sector during the second quarter of the year, and identifies key trends in the third quarter, marked by the opening up of our economy in the midst of a well-managed crisis.
Though the first quarter was off to a slow start, we saw the market rebound, caused by pent-up demand when show flats reopened in June.
According to the PropertyGuru Property Market Index Q3 2020, the quarter eventually closed with a slight gain, registering a 2.15% increase to 111.9 points.
There was a higher proportion of new-launch condominiums sold in Q3 as we expect the economy to recover by 2022 to 2023, when most of these projects are slated for completion.
These trends align with the Urban Redevelopment Authority's (URA) data, which recorded a 0.3% price increase in the private residential market despite earlier estimates of a 1.1% decline in the property price index.
PropertyGuru's Property Supply Index (PSI) also saw a record-high 46.39% increase. We’ll explain more about this later.
Diving deeper into district-level price indices, only seven out of 28 districts (8, 9, 10, 13, 17, 22, 28) recorded a decline in property prices in Q2. PropertyGuru's Property Supply Index (PSI) also saw a record-high 46.39% increase. We’ll explain more about this later.
Diving deeper into district-level price indices, only seven out of 28 districts (8, 9, 10, 13, 17, 22, 28) recorded a decline in property prices in Q2.
The second part of the report examines the top- and bottom-performing district trends in greater detail, and identifies some potential resilient regions across the island.
Increase in prices due to more launches being sold during Circuit Breaker
There’s been an increase in PropertyGuru’s Singapore Property Price Index (SPPI) and Property Supply Index. The SPPI, which tracks asking prices in the non-landed private residential market, increased marginally by 2.15% to 111.9 quarter-on-quarter.
Despite URA’s flash estimates of a 1.1% decline, official figures released on 24 July showed that the non-landed private market increased by 0.3% in the same quarter.
However, we’d like to highlight that the price index’s increase is an anomaly.
The number of resale properties transacted in the last quarter was significantly lower, at only 35% of total transactions. The prohibition of physical viewings during Circuit Breaker had a larger impact on completed properties than new launches.
In comparison, the quarterly average proportion of resale transactions to total transaction volume (new sale, sub sale and resale combined) for the preceding four quarters was 46.9%.
We think that primary market figures have buoyed the overall price index despite considerable price pressures in the resale market.
Median per-square-foot asking prices in Orchard and River Valley have once again made it to the list of districts with the biggest price decline.
We foresee District 9 facing more headwind in the coming quarters with increasing supply.
As discretionary spending declines further and household budgets tighten in the coming months, there may be a phased trimming or an extension of temporary relief measures for the property market, in order to prevent panic selling and hurting the economy as a whole.
That said, government intervention will continue to keep the property market stable and stakeholders' sentiments in check.
Significant growth in the number of willing sellers
The Property Supply Index tracks the number of non-landed private residential listings posted on PropertyGuru. The number of listings was 162,069 in Q2 2020 compared to 110,710 in Q1. This 51,359 increase indicated a peak in supply that surpassed previous quarters' numbers.
URA statistics recorded a 0.1% decline in vacancy rates for the OCR and RCR regions, while the CCR region recorded a 0.1% increase. The overall vacancy rate for the private residential market remained unchanged in the previous quarter at 5.4%.
There was only a marginal increase of 222 units in uncompleted private residential supply (excluding ECs) in the pipeline, with pending approvals.
These figures suggest that the record-high increase in the PSI came primarily from resale market owners who were keen to sell their properties.
But why do certain districts see a price growth while others, a decline?
Top 5 districts with the biggest increase in asking price
Bugis / Rochor / Beach Road
East Coast/ Marine Parade
Balestier / Toa Payoh
Dairy Farm / Bukit Panjang / Choa Chu Kang
Mandai / Upper Thomson
The largest jump in median asking prices is in District 7: Beach Road, Bugis, and Rochor.
The launch of The M during the COVID-19 outbreak meant that bigger new-launch discounts were offered, resulting in lower prices. After Circuit Breaker ended, the absence of early bird pricing contributed to District 7’s usual trading price range.
The other top districts had a high proportion of new launch listings, and saw the highest growth in asking price. New condos are usually more expensive than resale ones when using PSF as a barometer, hence the presence of new launches tend to push asking prices up.
Additionally, Circuit Breaker measures temporarily halted physical viewings, so new launches were not as affected as the resale condos market.
There was also significant interest on the investor front, as these projects are only slated for completion in 2022 to 2023, when the economy is expected to recover.
Top 5 districts with the biggest decline in asking price
Top five districts with the biggest asking price declines are those that did not have new launch condos to drive prices up:
Macpherson / Potong Pasir
Farrer Park / Serangoon Road
Orchard / River Valley
Seletar / Yio Chu Kang
Boon Lay / Jurong / Tuas
Asking prices for districts 22 and 28 fell the most (at -4.46% and -5.97% respectively), as there were few or no new launch projects in the area.
The outlier is District 13, where new launches made up 50% of the total listings in the district.
High competition among the various new projects led to more discounts and resulted in a 0.66% decline in the median asking price.
Top selling projects of Q2 2020 were still dominated by large developments with more than 1,000 units in the OCR and RCR regions. Only one CCR launch made it to the top selling list: Kopar at Newton.
Agents on the ground have also observed buyers’ preference for spacious units, especially those with extra study rooms, balconies, and larger private enclosed spaces.
This is in line with PropertyGuru's Consumer Sentiment Study H2 2020, in which 33% of the respondents expressed preference for bigger layouts.
In Q2 this year, seven out of 10 best-selling projects were located within a 10-minute walk to the MRT station, which suggests that buyers value transport-accessibility to a property.
3 popular districts with resilient prices
1. District 19 (Hougang, Punggol, Sengkang)
With District 19 being one of the largest and most popular neighbourhoods in Singapore, we expect continued demand for the rest of the year.
Prices in District 19 have jumped to $1,356psf despite the increase in supply of listings by 50.6%.
Quarter-on-quarter (QoQ) Supply Index Change: +50.6%
Listings count (supply): 20,172
Quarter-on-quarter (QoQ) median psf asking price change: +1.91%
Median psf asking price: $1,356psf
Popular District 19 projects that sold during Circuit Breaker:
The Florence Residences (150 units)
Affinity at Serangoon (51 units)
Riverfront Residences (42 units)
The Garden Residences (30 units)
Piermont Grand EC (31 units)
2. District 21 (Clementi Park, Upper Bukit Timah)
District 21 is favoured for its convenient and popular location. The URA Masterplan outlines an upcoming Beauty World Integrated Transport Hub, which bodes well for this district as it’s due for a rejuvenation and uplift!
Prices in District 21, a popular neighbourhood on the fringe of Bukit Timah and in the RCR, have jumped to a median asking price of $1,665 psf despite an increase in supply of listings by 72.1%.
Quarter-on-quarter (QoQ) Supply Index Change: +72.1%
Listings count (supply): 4,304
Quarter-on-quarter (QoQ) median psf asking price change: +1.42%
Median psf asking price: $1,665psf
Popular District 21 projects that sold during Circuit Breaker:
Daintree Residences (48 units)
Mayfair Modern (8 units)
View at Kismis (16 units)
3. District 5 (Buona Vista, West Coast, Clementi New Town)
District 5, covering Clementi, Pasir Panjang, West Coast, Dover and Buona Vista, is expected to remain resilient in the short- and long-term. Riding on the Greater Southern Waterfront growth plans by URA and its evergreen popularity as there are residential amenities.
Prices in District 5 have jumped to a median asking price of $1,498 psf despite an increase in listings supply by 56.4%.
Quarter-on-quarter (QoQ) Supply Index Change: +56.4%
Listings count (supply): 7,993
Quarter-on-quarter (QoQ) median psf asking price change: +0.34%
Median psf asking price: $1,498psf
Popular District 5 projects that sold during Circuit Breaker:
Kent Ridge Hill Residence (54 units)
Parc Clematis (154 units)
Whistler Grand (36 units)
What’s next for the private property market?
Our government will continue to aid businesses and improve employability, and at the same time, reassure local and foreign investors with its strong history of governance.
Although we expect higher price elasticity among resale property owners for the rest of 2020, large discounts are unlikely to surface in new launches en-masse. Transaction volumes will recover and developers can expect temporary relief measures.
Furthermore, the record volume of flats reaching MOP within the next two years should provide the private market with a steady stream of HDB upgraders who may take advantage of this, along with low interest rates.
Investors and property owners can take heart that even if the property market declines in the short-term, there will be present cooling measures to help reinvigorate the markets.
We know there's a lot to digest in this article, but if you're thinking of upgrading or investing in a property, understanding these facts and figures can really help with your decision-making!
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