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Is The Singapore Real Estate Market On The Cusp Of A Recovery? (Updated)

are property prices going down?
Private properties and HDBs have both seen a gain in prices in the last few months. What's going on?

First posted: 1 Oct 2020

Hello blog fans!

Thank you for your concern about why I stopped writing for a month plus now!

A lot has happened in the past month and amidst my hectic schedule, I have resumed actively trading short and long positions in the US stock market (Which is ALOT more rewarding than the STI) and finally found a property worth investing in after months of scouring the market for great deals and getting rejected many times by deep pocketed property sellers!

Some might think I'm mad to invest in the middle of COVID, but well, I am pretty certain of the dots I have joined based on local and global trends, and am putting my money where my mouth is, or as Nassim Taleb would call it, having skin in the game.

property market research singapore
My work desk, where I churn out my research articles and conduct zoom consultations with my blog readers.

So in a flash, we are near the 10th month of a momentous 2020.

Since COVID entered our world, global markets, predictions and hopes for a better future were all but dashed.

Market sentiments were at all time lows not too long ago and since then, stock markets and main street saw a drastic divergence in fortunes with investors making huge returns on their portfolios while average employees worry about their jobs and incomes.

My heart goes out greatly to those affected by this crisis whom are forced to change quickly and necessarily to keep up. It is not an easy shift to remain gainfully employed and I hope that you remain resilient in spirit as you go through this.

As in my earlier article, 5 Ways For Property Owners To Tide Through Crises, if you know someone who needs help and needs pro bono advice or help with their properties, drop me a note through my contact page and I'll be happy to guide them through the options at their disposal.

Although many think that the world will never be the same again in some aspects, a COVID vaccine on the horizon will definitely bring back the crowds and jobs and incomes will certainly recover.

For no amount of technology can replace the need for physical experiences like travel and socializing and there will always be demand for them even with the rise of technology like Zoom and virtual reality.

So, have faith that the future is just as bright as before, albeit with a temporal pause to let us catch our breath and enjoy the things that we see only when we slow down.

singapore real estate talk webinar
Sign up for my mailing list (Footer of page) if you are keen to attend my future webinars too.

While researching on macro trends recently for a market direction talk for my team, I noticed correlations between certain market indicators and our property price trends that are ripe for discussion.

Interestingly, amidst expectations of more layoffs in the coming months, the property market might be alot more resilient this time around compared to during the global financial crisis and could even witness the start of a bull run starting from Q1-Q2 2021.

It might get off to a slow start but a start nonetheless that will gain momentum as we get closer to the good news the world is craving for and so badly needs.

Let's start with taking a look at some charts so you can make your own judgments.

Federal Reserve Balance Sheet since 2008 Global Financial Crisis

how QE quantitative easing affects property prices
How QE in 2008 pales in comparison to what we have seen in just a few months of 2020.

In just 6 months, more than 3 trillion dollars and counting has been printed in the US alone compared to $1 trillion over 30 months following the Global Financial Crisis.

This amount of stimulus is unprecedented (And fairly so) and has created a slush of liquidity (cash) flowing from the government to the market place.

If we were to study the correlation of historical money supply vs the S&P500 below, which measures the largest 500 companies in the US, it is obvious that at every QE juncture, the stock markets rally as cost of funds are cheap and investors anticipate that assets inflation will occur (In itself a self-fulfilling prophecy).

Correlation between Money Supply and S&P500

How quantitative easing and tightening affects stock markets
How quantitative easing and tightening affects stock markets

Now, I hear some of you asking "What does this have to do with Singapore property market's performance?"

The US stock market has been a leading indicator of global economic performance and correspondingly, our property market as you can see in the chart below.

Singapore Property Price Index vs S&P500

Singapore properties usually take off 2-7 quarters after a stock market rally in the S&P500
Singapore properties usually take off 2-5 quarters after a stock market rally in the S&P500

Historically, you can observe that when the S&P500 started a gradual rally in Q42002, the property market bull run started gaining steam around in Q32004 - 7 quarters later.

Similarly, when the S&P500's bull run began in Q42008, our property market recovered in Q22009 (More accurately from March) - 2 quarters later.

Notably, the divergence years where this correlation was low were during 2013 to 2017 when the Singapore government implemented draconian cooling measures to keep a tight lid on real estate prices.

Beyond that, we can see how the S&P500 and PPI continued an uptrend until COVID caused a market rout in March 2020. (The S&P500 has since bounced back above the February 2020 high.)

The property market escaped this sell down though as real estate is relatively illiquid in nature (Which is a benefit in this case) and crowd-panic was largely contained by the relentless stimulus measures by the government and an effective high frequency communications strategy to prevent a panic-selling situation.

Further to that, auctions were halted, deferment of loans granted liberally and thousands of jobs created almost instantly to provide respite to the many affected industries.

Great job by the government managing the market if you ask me.

I stress again that Singapore property investors should be obsessed with how the US market is doing as the record shows that it is a reliable bellwether for our property market. 

Correlation of Money Supply and the Straits Times Index (STI)

Money printing and stock market rallies correlation thus far
Money printing and stock market rallies correlation thus far

As above, we can see the correlation between the money printing machine and our Straits Times Index (STI) performance.

It took less than 3 quarters for the STI to reflect the flow of liquidity towards our equity markets in 2008 and an almost immediate reaction during both QE2 and QE3.

Thus far, we have not seen a significant recovery in the STI since the lows of March 2020, but it is very likely to happen soon once US equities become overbought and fund flows start returning to the STI.

Explanation: The STI is pre-dominantly made up of traditional industries as compared to the tech-heavy S&P500 which thrives in COVID, and hence, takes a little more for a stronger rally to develop. 

Correlation Between Singapore Property Prices VS Money Supply

Singapore Property Price Index vs Money Supply.jpg
Notice the closing gap between the root source of money printing and our property markets

To put it into a timeline format, we can observe the following timeline that happened during the Global Financial Crisis and do our own projections for COVID.

How Money Flowed During The Global Financial Crisis

Singapore real estate begun an upward cycle from the 5th quarter of money printing activities.
Singapore property begun an upward cycle from the 5th quarter of money printing activities.

Timeline of Money Flow During COVID Up Till Now

COVID and singapore property market trends impact
Will history repeat itself this time? Or will it be delayed?

This time round though, we should not see the same timeline in play due to border restrictions and stringent cooling measures that were absent in 2008.

However, the mindset of investors chasing undervalued plays is still more or less the same which means a STI recovery is on the near horizon and which should follow with a real estate market rebound.

Just for interest sake, let's also take a look at how gold has performed since the stimulus began vs the Singapore property market.

Singapore Property Price Index VS Gold Prices

Gold prices vs Singapore Property Price Index
Notice the correlations between both asset classes? Are they a coincidence too?

Traditionally a known safe haven asset class, gold has rallied during periods of uncertainty (Including the uncertainty of whether quantitative easing is viable), and corrected during good times.

It is however, a volatile investment compared to Singapore property and can fluctuate quickly in price.

Once again, we can observe whenever gold prices rally, the property market follows a few quarters later.

Is this also a coincidence as I can hear some of you thinking in heads?

Well, why not consider whether this could be due to the fact that sooner or later investors realise that:

- They aren't going to squeeze out any yields out of a block of metal.

- Their profits are better recycled into another safe haven asset with reasonable yields and denominated in a currency that has historically appreciated against the USD.

Either way, this is another reason to expect fund flow onto our shores soon.

Now, this article should have given you sufficient food for thought from a macro perspective so let's dive a little deeper into why we might be closer to a recovery than expected.

Is The Real Estate Market On The Brink Of A Recovery?

GDP forecast by AMRO - Chaired by Finance Ministries of ASEAN+3 Nations (Source:
GDP forecast by AMRO - Chaired by Finance Ministries of ASEAN+3 Nations (Source:

Singapore's GDP is expected to grow by 7% for 2021 as forecasted by the Asean+3 Macroeconomic Research Office (AMRO) and we are expected to be one of the top 3 countries in GDP growth together with Vietnam and China.

It is important to note that AMRO isn't just any research firm but one that is chaired by the Finance Ministries of participating nations.

You can read it up here.

Property Price Index VS Household Income

Small gap between household incomes and property prices
Small gap between household incomes and property prices means a very resilient market.

As we can see, the cooling measures have done a great job in narrowing the huge gap that existed between property prices and household incomes between the years 2009 to 2013.

As a result, the property market is in a much more resilient state than it was in 2008, and is better positioned to weather through the storm.

This is surely one of the reasons why we are seeing prices trend upwards for both the private resale and new sale market from Feb to August, much to the dismay of market bears.

The HDB market too, has seen a steeper growth in prices in the months of July, August and September 2020, which bodes well for the private market.

See below chart bracketed in red.

Could the Enhanced CPF housing grants in 2019 finally be working its way into the HDB market trends
Could the Enhanced CPF housing grants in 2019 finally be working its way into the HDB market?

Cut In Housing Supply From Govt Land Sales

property market housing supply cut land sales
Apart from cutting housing supply, developers are also given a longer tender period.

Recent cuts in housing supply and extended tender periods are a clear signal that the government does not want an oversupply situation to weaken prices.

It is no secret that Singapore properties are very closely monitored and controlled by the government.

It is a wonderful thing in fact as this results in a less volatile market where growth and stability can flourish.

In my mind, there is no doubt that the government wants property prices to appreciate long term as it will align with the greater vision of attracting foreign funds, investors and preserving the retirement funds of its citizens who have much vested in properties.

Unsold Supply of Private Property and Executive Condominiums

Steadily decreasing unsold supply of properties
Steadily decreasing unsold supply of properties

The majority of developers have ample time to sell out their projects given the steady monthly sell-through rates.

The total present supply is estimated to sell out between 2023-2024.

As such, the majority of developers can be seen holding up prices in recent months and offering only small discounts.

It is important to note too that developers are operating on much thinner profit margins this time round as compared to 2008 and do not have as much room to maneuver while maintaining profitability (And jobs!).

Healthy Occupancy Rates in the Private Residential Market

Healthy occupancy rates in the residential market
Healthy occupancy rates in the residential market

Occupancy rates in the past 3 years has improved tremendously and thankfully most property owners are able to rent out their properties and cover their principle repayments during this time.

This, on top of the loan principle and/or interest deferments schemes currently means a market place with alot less urgent sellers who would cause prices to drop as quickly as it did in 2008.

Rise In Construction Costs Imminent

Construction costs, on top of raw materials costs, will increase with increased compliance requirements.
Construction costs, on top of raw materials costs, will increase with increased compliance requirements.

With rising construction costs, developers will have even thinner profit margins that makes their option of lowering prices significantly even less possible.

Low Interest Rates Visibility

The likelihood of interest rates staying low will prompt more to borrow and invest in properties
The likelihood of interest rates staying low will prompt more to borrow and invest.

As Singapore interest rates track the US, we can expect low interest rates to be the norm for while too.

The mid term visibility of this low cost of funding environment will no doubt spur asset markets and businesses to borrow, invest and expand more aggressively.

Sub 2% Interest Rates Are Likely To Last Beyond 2025

Low interest rates for property investment singapore
Low interest rates are the new norm of the 21st century.

Although the Fed sees interest rates staying low only through 2022, it is likely to remain low for much longer as it took 10 years after the Global Financial Crisis for interest rates to recover to just 2%.

Fed Announces Inflation Targeting Plans

Inflation targeting policy of us and how it affects properties
Higher inflation is on the horizon and quality assets will benefit most from this.

This is a very important signal of how asset prices will move in the near future.

With the Fed announcing this major shift in their policy to target inflation above the 2% mark, it is no surprise that institutional investors with a better understanding of how the dots link up, will continue pouring funds into various asset classes as holders of cash will now expect a depreciation of 2% per annum if they kept it in their bank accounts.

Retail investors, who are usually later to the party, are expected to continue chasing after yields in other asset classes such as property once other markets are deemed overbought.

Household Networth VS Property Price Index

Smallest gap between household networth and property prices since 1995
Smallest gap between household networth and property prices since 1995

As seen above, the narrowing gap between household net worth and the property price index shows us that household balance sheets are very healthy.

The evidence of such can be monitored through an increase in property purchases under trusts in the past few years, that helps families channel their idle savings into properties while saving on ABSD.



After thorough examination of the trends around the world and placing Singapore property within the context of investment vehicles, although there might be near term retrenchments and business disruptions, there are many fundamental reasons to be bullish about Singapore properties now and in 2021.

And that is why personally, I have jumped in recently as well and believe that it is an opportune time for you to hunt for good properties if you are well-capitalised and confident of your employment prospects.

There are definitely many sectors that are affected and undergoing rapid disruption but the Singapore real estate market is likely to remain robust with the highly effective and responsive government intervention we have seen so far.

If you've read till the end, let me know your thoughts too!

Take care now and hope this article helps you join the dots between global trends and local markets better!


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Stuart Chng is an Executive Group District Director of Huttons, and a renowned leader and personality in the real estate industry.

He adores music and can play a few instruments decently without upsetting his neighbours. When not doing so, he enjoys pillow fighting with his son and coming up with silly puns which barely amuses his wife.

Professionally, he is a licensed real estate agent, an avid stocks, options and real estate investor, business owner, team leader, speaker and columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 8, PropertyReport, PropertyGuru and other publications.

Throughout his career, he has helped many clients grow their wealth through selecting great property investments and managing their portfolios actively. Read his clients' reviews here.

Stuart has also coached many top million dollar producing agents from different real estate agencies in Singapore. Read his agents' reviews here.

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