[2021 Repost]
In a blink of an eye, we are already in April in 2021. We had walked into 2021 with renewed hope, as vaccinations for COVID-19 rolled out in batches in Singapore. It had started with healthcare workers and frontline staff and at the point of writing – Residents aged below 45 can make their appointments from June.
2020 was a tumultuous and unprecedented year. Besides the obvious economic impacts, it had influenced and changed people’s perceptions and priorities too.
Over at the Singapore residential property market scene, we had seen a brief negative outlook during the circuit breaker which turned direction when Phase 3 starts. Transaction volume then started to increase steadily and as of start of 2021 – new price heights have been reached surpassing pre-COVID 2019 levels.
Of course, many articles and videos out there have already elaborated on this uptick in the property market in 2020. This has been discussed enough and this is not my objective. What I will like to share is (in my opinion) what could be the trends and directions of the 2021 Singapore property market:
Trend 1: Work-From-Home (WFH) Culture
COVID-19 has dramatically changed the working landscape as it forces employers to adopt safe-distancing measures. The government has constantly reminded employers to have work-from-home arrangements as well so as to reduce contact.
While this arrangement has been lessened over the later months of 2020 as the COVID-19 situation got better – it is still highly recommended. So much so, some companies have made WFH a permanent thing along with working in office on an alternate basis.
What does this all mean though? It means people are spending more time than ever at home. As such, space and privacy has become more important than ever. This has driven people to look for bigger or their own homes away from their family to obtain the space and privacy they crave. This would have contributed to the increased property transactions in 2020.
Private Property
We can see above how private property transactions went up in Q3 and Q4 2020, topping the peak of transactions pre-COVID in Q3 2019.
However, during this period in 2020 – delays in construction were expected as the Circuit Breaker brought a halt to many business activities. This has resulted in many people looking at resale units as a way to avoid the delay. This in turn has made 2020 a very good year for resale transactions which you can also see above.
HDB
On the HDB resale front – this resale demand is especially obvious as the price index climbed for the first time in end 2020 as prices have constantly fall since 2013.
Moving forward, we do expect the WFH culture to become increasingly ingrained as companies set up new working arrangements for the future. The resilient demand shown in 2020 is expected to show again in 2021 as the need for space amongst Singaporeans become ever more pronounced. This could translate to greater demand for properties and resale units in particular as supply of suitable new launch units fall.
Trend 2: Well-Being Focused Developments
Property design will likely include a new (or emphasized more) aspect in these times: Well-Being
As people spend more time at home or in community spaces around their home, developers have to rethink what is most important to people now. As such, both physical and mental well-being factors are taken into account when designing properties.
URA has taken the lead here – by drawing up plans combining well-being along with eco-sustainability. Future HDB towns are likely to be more inclusive, smarter, greener and more community amenities. Such designs not only benefit residents, but it also helps to allow population clusters to be more self-sustaining which aids in the event of a similar future outbreak.
Private developers are also seeing the needs and benefits of designing developments focused on well-being. For example, One Pearl Bank has allowed community faming features within development and its “Hygge” concept allows greater mental well-being.
A more recent example would be the recently launched The Atelier by Bukit Sembawang. The pandemic has allowed the developer to reconsider its design. It plans to introduce features such as face recognition tech and contactless wave buttons for access; as well as smart parcel box to receive packages digitally. Not only that, it rides on WFH trends by designing a work/study area amongst its facilities for its residents as well.
We do expect to see more of this design aspect coming into all our future developments – be it private or HDB.
Trend 3: Space Flexibility
Besides incorporating well-being aspects into the development – there is a need for spaces to be flexible as well. As our property needs change ever more rapidly in these times, the space we own or rented has to fit our needs as well.
This need for flexibility is not lost on developers too as they create flexible work and home spaces. For instance, the rise of co-working spaces or office spaces offered by companies such as CapitaLand and JustCo are increasingly popular due to its flexibility in creating required space and its contract terms as well. This extends to small companies or freelancers needing a space as well.
This will help firms to add or reduce space with ease and drive costs down – making them more shock-proof as well.
Homes are also increasingly more focused on flexibility of space as developers offer flexible spaces and layouts in their units. For example, Midtown Bay by GuocoLand offers units which allows residents to freely design their spaces based on their living spaces, home office and entertainment needs. Other developments also offer units which comes with a ‘Flexi’ room which can be converted to what they require. Structural walls are lessened too so that residents can tear or build up required partitions. Such flexibility also extends to HDB flats.
Expect space flexibility as one of the property trends going into 2021!
Trend 4: Low Interest Environment
This has been a result of the economic impact left by the pandemic. As the economy reels from COVID-19, interest rates continuously plummet. This has definitely affected our deposits and dividends, but on the flip side – mortgage rates are lower than ever.
The fall in interest rates made property purchases more attractive. Furthermore, it made sense. Properties are traditionally seen as safe asset havens and these times made properties more attractive than ever.
While interest rates are creeping upwards now at this point of writing, its rates are still low and it is likely it will be STILL be one of the trends driving the property market in 2021.
Trend 5: Increased Land Sales
In 2020, we have observed the government cutting land supply due to COVID-19. It was appropriate due to the business outlook then and the large supply in the pipeline.
However, as 2020 goes, property demand remained strong and the land bank of developers continue to dwindle. With unsold inventory falling to 27,000 units – developers are starting to look to purchase more land. This may very well be good news for people looking to en-bloc too!
And developers have already started to take action at the end of 2020. An example is Roxy-Pacific purchasing 15 adjoining two-storey terrace houses for a price of $93M in November 2020. Going into 2021, we expect more land sales on top of an improving economy and an encouraging 2020 as one of the property trends.
Summary
Well, there you have it! How will 2021 fare remains to be seen, but it does look more optimistic than 2020. And we all know how 2020 turned out to be.
It is always advisable to do your own due diligence before any action. Please also note the 2021 property market is way more complex than just the 5 trends and directions above, and it is always good to seek clarification on your own personal situation before anything.
If in doubt, talk to your property agent or you can reach out to me here as well! Cheers!
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