Updated: Jun 10, 2021
It's my 2nd time working on the Quarterly Property Market Report with the highly talented PropertyGuru team (Timothy Beers, Dr Tan Tee Khoon and Eugenia Liew) and am deeply honoured to co-author this cornerstone report for the real estate community.
Compiled below are some key insights from our many hours of data mining and research through proprietary data from PropertyGuru's analytics and URA, and published on PropertyGuru.com.sg and with consent, on my blog.
As with reports (And some say me), this is going to be a long 12-min read, so make sure you are ready before scrolling any further.
Hopefully you will find this helpful in making wiser investment choices!
A Short Recap Of An Unforgettable Q2 2020 For Singapore And The Property Market
Q2 started on a pretty dour mood as COVID-19 infection figures grew exponentially on our shores in early April.
The heights of fear and despair among the population were possibly at its peak with the
announcement of a 1-month circuit-breaker period on 3rd April 2020 and subsequently
another month of extension till 1st June 2020.
In many parts of Singapore, it was reported that a collective sigh of the nation was heard
when the extension was announced.
In the first month of circuit-breaker, the majority of residents adjusted to their new way of life and showed extraordinary enthusiasm for documenting their new exercise regime amidst other home-based activities on social media.
The second month passed rather swiftly in contrast, as by then, most people had adapted to the new norms in daily life.
Despite transaction volumes taking a hit, eager property buyers adapted to virtual avenues such as virtual presentations and viewings of show flats and occupant assisted virtual viewings of physical properties to continue in their search.
This unprecedented national lock down also meant that home buyers and investors became extraordinarily careful and mostly sat on the fences, until an expected surge in property sales occurred in June when the majority of the economy resumed with Phase 2 of circuit breaker.
PropertyGuru Singapore Property Market Report Q3 2020 Overview
This report examines what played out in the residential sector during an unprecedented second quarter of the year, identifying key trends that are unfolding as we enter the third quarter, marked by the opening up of the economy and a well-managed health crisis.
Due to the stringent circuit breaker measures that put a pause on most of Singapore's economy, the 2nd quarter was off to a slow start.
However, when show flats reopened in June, there was a market rebound likely caused by pent up demand.
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 relatively higher proportion of new launch condominiums sold in the quarter, as many 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 noted a 0.3% price increase in the private residential market despite earlier estimates of a 1.1% fall in the property price index.
Additionally, during the same time, PropertyGuru's Supply Index saw a record-high 46.39% increase.
This was driven by a large pool of sellers in the resale market who are keen to let go of their properties.
“The rebound in prices broadly signifies that the government’s temporary relief measures have done their job in shoring up consumer confidence and prevented a panic selling situation from developing in the property market,” says Dr Tan Tee Khoon, Country Manager, Singapore, at PropertyGuru.
Diving deeper into district-level price indices, it is interesting to note that only 7 out of 28 districts, namely 8, 9, 10, 13, 17, 22 and 28, recorded a decline in property prices over the second quarter.
Diving deeper in part 2 of the report, we will examine the top and bottom performing district trends in greater detail and distills key insights and identify some likely resilient regions across the island.
The Guru View
5 quick noteworthy findings of the Property Market Index Q3 2020
1. An Observed Slight Growth in Property Asking Prices
In the quarter, the asking prices in the non-landed private residential sector saw a surprising increase despite a significantly higher number of listings on PropertyGuru.
2. Higher Proportion Of New Launches To Resale Condos Sold In The 2nd Quarter
A higher than usual proportion of new launches sold in the quarter could have contributed to the marginal increase in the price index.
New launches continue to be favoured in the current market as the majority of investors feel that by 2022 to 2023, when the majority of launches are slated to be completed, the global economy will be back on track and the COVID-19 situation, under control.
3. MRT - Accessibility Remain A Key Priority For Investors
7 out of 10 condos were located within a 10-minute walk to the MRT station, indicating that buyers continue to place high emphasis on the transport- accessibility to a property.
6 out of the top 10 best-selling projects in the quarter were also launched prior to 2019.
4. Buyers Preferred Larger Developments and More Spacious Units
Large developments that typically have larger plots of land and more comprehensive facilities made up most of the top 10 bestselling projects in the quarter. The upcoming 2021 new launch at Irwell Bank Residence will be one such example.
On the ground, it was also observed that buyers prefer more spacious units, likely due to the expectation that the work from home culture is set to stay for the longer term.
This aligns with the findings of PropertyGuru's Consumer Sentiment Study H2 2020, where 33% of the respondents indicated a preference for bigger layouts.
5. Funds Are Likely To Continue Pouring Into Property
On the investor front, we expect to see an increase in demand for less volatile assets like properties in the 2nd half of 2020.
This is a common trend during economic slumps when tsunamis of money printing keep interest rates low and consumers look towards physical assets like gold and properties to hedge inflation risks.
PropertyGuru Property Price Index and Supply Index Overview
Diving deeper into the PropertyGuru Property Market Index Q3 2020, we noticed that there was a slight rise in the Singapore Property Price Index (SPPI) and a significant increase in the Property Supply Index (PSI).
Much of the economy had come to a halt during the two months of the circuit breaker, but halfway through the quarter when Singapore entered Phase 2 of its reopening, the market saw a rebound.
Price Index Overview: Prices strengthened marginally due to a higher proportion of new launches sold during the circuit breaker
The PropertyGuru Singapore Property Price Index (SPPI), which tracks asking prices in the non-landed private residential market, increased marginally by 2.15% to 111.9 quarter-on-quarter.
Despite the Urban Redevelopment Authority’s (URA) flash estimates of a 1.1% decline, official figures released on the 24 July 2020 showed that the non-landed private market increased by 0.3% in the same quarter.
However, underlying the apparent increase in the price index is an anomaly that should be highlighted, as the proportion of resale properties transacted in the last quarter is significantly lower (only 35% of the total transactions).
This is likely due to the prohibition of physical viewings that has 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 is 46.9%.
Hence, it is our view that the 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 most price declines.
We anticipate that District 9 is likely to face more headwinds in the coming quarters with the significantly higher supply numbers.
At this stage, it appears that the man on the street has yet to feel the brunt of COVID-19’s economic impact as the government stimuli continue to prop up businesses and employment numbers.
As discretionary spending drops and household budgets tighten for the foreseeable months ahead, we might see a phased trimming or an extension of the temporary relief measures for the property market in order to prevent panic selling situations from developing, hurting the wider economy as a whole.
It is likely that active government intervention will continue to keep the property market stable and stakeholders' sentiments in check.
Supply Index Overview: Significant growth in the number of willing sellers
The PropertyGuru Property Supply Index (PSI), which tracks the number of non-landed private residential listings posted on PropertyGuru, recorded a growth of 46.39% from 192.9 in Q1 2020 to 282.4 in Q2 2020.
In absolute numbers, the recorded number of listings is 162,069, compared to 110,710 in the previous quarter. The 51,359 increase in listings indicate a peak in supply that surpasses all previous quarters' numbers since records began in Q4 2016.
Meanwhile, 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 over the previous quarter at 5.4%.
We also noted that there was only a marginal increase of 222 units in uncompleted private residential supply (excluding Ecs) in the pipeline with planning approvals.
These figures suggest that the record-high increase in the PropertyGuru Property Supply Index (PSI) comes primarily from resale market owners who are keen to let go of their properties.
Despite the record number of willing sellers, we dive deeper to find out why certain districts are seeing price growth while others, price decline.
5 Districts With The Most Growth In Asking Prices
In the top 5 districts category, the largest jump in median asking prices is in District 7 (Beach Road, Bugis, Rochor).
This is largely due to the previous quarter's launch of The M, which entered the market during a period of high uncertainty, resulting in greater new launch discounts and hence, lower prices.
The absence of early bird pricing in The M in this quarter has since brought prices in District 7 back to its usual trading price range.
New condos are typically more expensive than resale ones when using PSF as a barometer. Hence, the presence of new launches tend to push asking prices up.
This can be seen in the rest of the top districts with the highest asking price growth, which all had a higher proportion of new launch listings compared to total listings, hovering at above 20%.
Additionally, the circuit breaker measures which put a pause on physical viewings did not affect new launches as much as it did to 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 as well.
5 Districts With The Most Declines In Asking Prices
The districts which saw the most significant asking price declines were generally those which did not have new launch condos to drive prices up.
District 22 and 28 saw the most significant fall in asking prices at -4.46% and -5.97% respectively, as there were few or no new launch projects in the area.
Likewise, District 8 had a relatively low proportion of new launch listings, causing in 0.9% dip in asking prices.
The outlier is District 13, which was an extreme case with new launches making up 50% of the total listings in the district.
Due to high competition among the various new projects, more discounts were given recently, resulting in a 0.66% decline in the median asking price.
The Stars: Top Selling Projects Q2 2020
The top selling projects continue to be dominated by the very large developments exceeding 1,000 units that mainly come from the OCR and RCR regions.
Only 1 CCR launch made it to the top selling list – Kopar at Newton.
On the ground, agents have also observed a preference for more spacious units, especially those with extra study rooms, balconies and larger private enclosed spaces (PES).
This aligns with the findings of PropertyGuru's Consumer Sentiment Study H2 2020, where 33% of the respondents indicated a preference for bigger layouts.
This is likely due to the expectation that most of Singapore will continue staying indoors and telecommuting for the foreseeable future.
Again, as with the previous quarter, 7 of the 10 bestselling projects are located within a 10-minute walk to the MRT station, suggesting that buyers continue to place a high emphasis on the transport-accessibility to a property.
Districts In The Spot Light
Districts 5, 19 and 21 have seen good growth, and are likely to remain the darlings of local investors.
Read further to find out how they have performed, why they are popular districts and why prices are likely to remain especially resilient over the next few quarters.
District 19 (Hougang, Punggol & Sengkang)
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
Prices in District 19, part of the Rest of Central Region, has increased to $1,356 psf despite the increase in supply of listings by 50.6%.
Popular projects in District 19 with units 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)
The resulting PropertyGuru Supply Index increased from 240.8 to 362.6 or a jump of 50.6% with listings increasing from 13,396 to 20,172.
With District 19 being one of the largest and most popular neighbourhoods in Singapore, we can expect to see strong demand continue for the rest of 2020 from young families and HDB upgraders from the Punggol, Sengkang and Hougang estates.
District 21 (Clementi Park & Upper Bukit Timah)
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
Prices in District 21, a popular neighbourhood on the fringe of Bukit Timah and in the Rest of Central Region, has increased to a median asking price of $1,665 psf despite an increase in supply of listings by 72.1%.
Popular projects in District 21 with units sold during circuit breaker:
Daintree Residences (48 units)
Mayfair Modern (8 units)
View at Kismis (16 units)
The PropertyGuru Supply Index increased from 212.5 to 365.7 or a jump of 72.1% with listings increasing from 2,501 to 4,304.
The convenient and popular location of District 21, with its good schools and upcoming URA Masterplan for the Beauty World Integrated Transport Hub bodes well for this district as it undergoes rejuvenation and an injection of vibrancy into the area.
District 5 (Buona Vista, West Coast & Clementi New Town)
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
Prices in District 5, which covers Clementi, Pasir Panjang, West Coast, Dover and Buona Vista, has seen an increase to a median asking price of $1,498 psf despite an increase in listings supply by 56.4%.
Popular projects in District 5 with units sold during circuit breaker:
Kent Ridge Hill Residence (54 units)
Parc Clematis (154 units)
Whistler Grand (36 units)
The PropertyGuru Supply Index increased from 286 to 447.3 or a jump of 56.4% with listings increasing from 5,112 to 7,993.
District 5 is expected to remain resilient in the long and short term riding on the Greater Southern Waterfront growth plans of URA and the evergreen popularity of this neighbourhood with good schools and residential amenities suitable for most families.
What Can We Expect Moving Ahead?
With low fatality rates among COVID patients in Singapore, and the controlled spread among the community as we have observed so far since Phase 2, it appears that the worst is over, at least locally.
As the world inches closer to the discovery of a vaccine, our government stimulus that is working its way throughout the financial system appears to be working well in mitigating the impact on the general economy.
We are hopeful that with the rapid re-skilling of the labour force currently underway, residents’ jobs and incomes will not have to suffer once the stimulus effects wane.
With the unwavering resolve of the government to sustain businesses and employ-ability, a strong healthcare system and governance track record that reassures both local and foreign investors, it is highly probable that Singapore will emerge with one of the least contractions around the globe and attract even more foreign investors to our shores.
Although we expect higher price elasticity among resale property owners in the second half of 2020, large discounts are unlikely to surface in new launches market en-masse as transaction volumes recover and developers are given reprieve with the temporary relief measures for the property market.
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 taking advantage of this window of opportunity amidst low interest rates to upgrade.
Investors and property owners can take heart that even if a worst-case scenario pans out in the property market, minor tweaks to the present cooling measures will very quickly reinvigorate the markets back with fervour.
Perhaps, before we even know it, the new projects show flat queues will be back again.
Need an opinion on your property investment plans, the best buys available today or help marketing your properties?
Get a 1-time free 30 min Property Wealth Planning consultation. Schedule one right now.
A PWP consultation includes:
- An in-depth financial affordability assessment and timeline planning
- Highly relevant investment insights
- A clear and customised investment road map
- A curated list of best buys in today's market with good growth potential & minimal risks
- Selecting units with the highest potential in a new launch project
- Has your property stagnated in price? What options do you have?
- Advice on marketing and getting a buyer for your property fast
Stuart Chng, Senior Associate Executive Director of OrangeTee & Tie, is 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.