Singapore's property market will end 2021 with its best sales performance in recent years, with prices of private homes rising six consecutive quarters to a historical high in the third quarter of this year.
Prices of city fringe condominium units in the Rest of Central Region (RCR) and landed properties reached their peaks last quarter, while suburban condo unit prices in the Outside of Central Region (OCR) hit new highs in Q2.
More than 25,000 private homes, excluding executive condominium units, were sold in the first nine months of this year, higher than the annual sales recorded over the past three years.
The progressive easing of Covid-19 restrictions will support the recovery of our consumer-facing sectors and alleviate labour shortages in some industries.
The growing economy will likely improve market sentiment and boost buyer confidence. So how will the market perform next year and what are the key trends to watch?
A limited supply and robust demand may continue to prop up prices.
There is an influx of HDB upgraders buying condo units in the suburbs and city fringes this year. Many home owners sold their flats to capitalise on the rising resale flat prices and are looking for replacement homes. Other Singaporeans bought private homes for fear that prices may climb further when our economy pick ups.
Many condominiums from the last collective sale cycle have been launched. Sales were brisk across many projects, and the unsold private housing inventory has dipped to a nearly four-year low. Also, the supply from the Government Land Sales (GLS) programme was moderated over the past two years to keep pace with the uncertain economic outlook.
The private land bank has similarly declined as successful collective sale deals during the pandemic have been few and far between.
The number of new project launches is expected to slide further next year. Less than 30 projects could be launched for sales, which is in stark contrast to the 50 over projects launched in 2019. Close to 9,000 units, including executive condominiums (EC), may be released in the market and this is about 17 to 20 per cent lower than the annual numbers in 2019 and last year.
What this means is that the property sector is turning into a seller's market where home owners have the upper hand in setting prices. Moreover, construction costs have spiked on the back of a workforce crunch and higher building costs. Therefore, private home prices may rise further by 6-9 per cent next year. On the other hand, sales volume may dip by 10-15 per cent since fewer units would be launched for sale and price resistance may occur in some areas.
While the property market may face headwinds like more property curbs, uncertainty due to the pandemic and inflation, some positive factors may mitigate these risks.
For instance, the rental market may bounce back strongly next year when air travel is substantially restored. Vaccinated travel lanes (VTLs) have been established with numerous countries, and more foreign expats, business partners and students could return after a two-year absence. The expansion of Singapore's border reopening may spur employment growth for foreign expats. Hiring prospects may improve in sectors like aviation, Mice (meetings, incentives, conferences and exhibitions), hospitality and tourism.
The vaccinated travel lane at the Causeway may see stranded Malaysian workers returning to Singapore, which may uplift rental demand in the suburbs and public housing segments in the long term. Amid a tight supply of completed homes and robust demand, rents may rise at a faster pace of 8- 11 per cent next year, and leasing volume may climb by 3-4 per cent.
Some upcoming project launches could grab headlines. AXA Tower, opposite the Tanjong Pagar MRT station in Shenton Way along Cecil Street, will be redeveloped into a new mixed-development comprising residential units and office space. New projects at the former Maxwell House and Marina View white site could be launched within the same precinct in the second half of next year.
Downtown Core has been gaining traction as a new hot spot for luxury homes in recent years. The area is set to benefit further when it is rejuvenated alongside the planned development for the Greater Southern Waterfront.
An upcoming EC project in Tampines Street 62 by Qingjian Realty and Santarli Construction, and two leasehold sites - a private residential development with commercial space at Lentor Central by GuocoLand and a private housing site in Ang Mo Kio Avenue 1 opposite the Bishan-Ang Mo Kio Park by a joint venture among UOL Group, Singapore Land Group and Kheng Leong Company - may be keenly watched as these projects could set new price levels in those areas based on their record land prices and attractive locations.
Other residential projects that may draw buyers' interest include Liv @ MB in Arthur Road, the Pollen Collection, which is the third phase of strata landed houses to be launched in Nim Road and the redevelopment of a sprawling hilltop site at the former Caldecott Broadcast Centre. New condominiums in Northumberland Road bought by City Developments (CDL) and joint venture partner MCL Land, and Tanah Merah Kechil Link bought by MCC Land (Singapore) may be ready for launch next year.
After a three-year hiatus, the collective sale market could see a revival as many developers are keen to replenish their land bank. Recently, two freehold sites in Thiam Siew Avenue were sold for $815 million to a joint venture between Hoi Hup Realty and Sunway Developments, which is the biggest housing site sale since 2018.
A few other developments have been transacted this year, including Flynn Park in Pasir Panjang that was sold for $371 million in September to a joint venture between Hoi Hup Realty and Sunway Developments, and Watten Estate Condominium in Bukit Timah that was sold to a joint venture between UOL Group and Singapore Land Group for $550.8 million in October.
These collective sale deals indicate that land-starved developers are on the lookout for good land sites to shore up their land banks. Many developers have been paring down their stock amid the brisk new-home sales. The collective sale market was adversely impacted by the 2018 cooling measures and the pandemic. Less than 10 collective sale deals were closed last year whereas more than 30 deals were inked in 2018.
Although we may not experience a collective sale frenzy like the one seen in 2017 and 2018, the recent activities could be the start of more to come. A growing number of collective sale sites have been launched for sales, including Thomson View condominium, Hillview Terrace, International Plaza, Elizabeth Towers in Orchard Road, La Ville at Tanjong Rhu, Lakepoint condominium in Jurong and Chuan Park condominium in Lorong Chuan. Well-located and reasonably priced developments may see higher chances of collective sale success next year.