On 1 Apr 2021 the Urban Redevelopment Authority (URA) released flash estimates of a 2.9% rise in prices for Q1 2021, which is the highest growth since Q2 2018 for private residential private property. This resulted in a rise of more than 5% for last 2 quarters (3.3% in 1st Quarter 2021, compared with the 2.1% increase in the previous quarter) in residential PPI price. Just on condo, the resale volume hits 10 year high and prices rise for 8th straight month.
For the public housing resale market (HDB), HDB resale price index also increased 5% year on year in Year 2020 while the number of resale transactions rose 4.4% year on year to 24,748 flats. Especially in the last quarter of Year 2020, the growth of the HDB resale price index accelerated to 3.0% in 1Q2021 and 3.1% in 4Q2020 quarter on quarter respectively base on information provided by HDB RPI .
Besides the expected economic recovery (also in this period of low mortgage rate provided by Bank) and influx of ‘Younger’ (less than 10 years old) resale flats from Year 2011 to Year 2014, the longer duration to wait for new BTO flats due to the pandemics has also turned many buyers to resale flats.
The above will likely made residential home investment more difficult and slow down the increase of home prices in the short term while maintaining the ease for first time Singaporean/SPR home buyer purchasing the first private property house or resales flat. To evaluate the price trend of private properties outlook for Year 2021, the quarterly and yearly statistics from URA website on demand/supply with unsold units and the pipeline supply of private residential units will give a good gauge if you could also project the net movement of immigrants coming to Singapore in the coming year.
(Refer to URA site https://www.ura.gov.sg/Corporate/Media-Room/Media-Releases/pr21-10)
Looking at the figures provided by URA below, there is only a supply of 4,942 new private residential units for Q2-Q4 2021. Q1 2021 itself had sold out 3,457 new units (more than a third of Year 2020 of 9,838 units) and it may exceed 10,000 units easily for Year 2021 subject to more stringent cooling measures as we noted that foreigners have not been flowing in fully due to Covid-19 border control. This will likely drive down unsold supply for Year 2021 and drive up the price further.
As such, the market is predicting a new round of cooling measures by the government to curb the price increase (private residential and HDB resale) and align the increase closely to the economic growth and fundamentals. However most analysts expects the cooling measures to be confined to residential properties for investment purchases rather than those for owner occupation.
Possible Cooling Measures to Residential Properties in Year 2021
- Tightening the Total Debt Servicing Ratio (TDSR) for 2nd and above home loan
- Reducing the LTV for 2nd and above home loan
- Increase the Seller Stamp Duty (SSD) quantum or number of years to 4
- Releasing more land in the coming Government Land Sales (GLS) for private property bids