Positive price forecasts for Singapore property in 2021

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Where’s the Singapore property market headed in 2021? In this post, we take out our crystal ball and gaze into it to see where property prices will end up by the end of the year.

We won’t give you what we think, but we’ll draw on experts in the business who track the market day in and day out, to see how they think prices will fare this year.

Starting with Morgan Stanley. They think prices will rise 5% this year.

From a stable 2020 to a rising year, Morgan Stanley expects home price growth to accelerated to 5% from 2% growth in 2020, as the global and Singapore economies enter a V-shaped recovery.

Demand is also likely to come from additional headcount of multi-national companies such as Google, Zoom, Tencent and Bytedance expanding their operations in the country.

Positively for property prices, the net wealth of Singaporeans in property is at a historically low level. On the other hand, many Singaporeans are sitting on a lot of cash.

If these Singaporeans sitting on cash decide to invest in the property market, there will likely be support for prices.

Next up, Bank of America.

A little more bearish than Morgan Stanley, they think that property prices will recover by 1% in 2021, but rise strongly after that by 5% in 2022.

Supporting this view is the declining levels of inventory (i.e. unsold units) in the market.

This inventory has fallen from a peak of around 38k units in 2018 to where it is presently.

What this means is that there is fewer choices for buyers if they want to get a unit.

At the same time, because demand is outstripping supply, there is some level of support for prices. This is good for those who already own a private property.

For those who do not yet own a private property, it is not too late because the inventory is still falling, meaning the market could be in the early stages of prices increasing.

Next up: Lee Sze Teck of Huttons thinks that property prices could increase 3% this year.

The key reason for the increase in prices is because of recent land tender prices and higher construction costs because of COVID-19 safety measures.

So the increase in prices is more due to an inflation of the cost of goods and services used to build properties, rather than an organic increase in the value of the houses.

Nevertheless, an increase in prices to whatever reason is still money in the pocket for a homeowner.

Tricia Song from Colliers expects private home prices to rise 3-5% in 2021, tracking GDP growth.

Further reasons given for the growth in 2021 is because of an expected economic recovery in the year. This will result in stronger buyer power among purchasers.

Together with limited supply from a fewer number of launches, buyers will likely need to dip into projects that have already launched or into the resale (secondary) market.

From OrangeTee, they see the URA property price index rising between 1% and 4% in 2021.

Singapore’s housing market will continue to be boosted by ample liquidity circulating in the system. Spillovers of liquidity from around the world because of loose monetary policy by central bankers is likely to aid the increase in property prices locally.

Demand is expected to be resilient in 2021, with Singapore having favourable long-term prospects. Healthy fundamentals is made up of a pro-business environment, excellent healthcare and education standards, a safe-haven status and political stability.

Knight Franks see prime property prices in Singapore growing in the range of -1% to 4% in 2021.

The country has managed the COVID-19 storm relatively well, with domestic demand picking up on the back of low interest rates.

Sales volume picked up since the lifting of ‘circuit’ breaker measures in June.

With further easing in phase 3 of the ‘circuit breaker’ as well as the resumption of some international leisure travel and the subsequent return of foreign buyers, Knight Franks sees some upside to local property market prices for the year.

A notable investment bank, Credit Suisse, sees property price increases of 4% to 6% in 2021, slightly below a forecasted GDP growth of 6% for the year.

The investment bank expects steady underlying demand and improving sentiment to support an increase in sales volume, which will have positive flow on effects for prices.

By region, prices in the CCR is expected to remain flat, while there is likely to be increases for the RCR and OCR regions.

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