This year, due to the Covid-19 pandemic, Singapore faced its worst recession since independence in 1965. As of 30 October, the total unemployment rate was 3.6% with more than 20,400 workers laid off this year. The Government is forecasting the country’s GDP (Gross Domestic Product) to shrink between 5 and 7 per cent.
Despite the grim economic outlook, the Singapore property market doesn’t seem to be very much affected. Once the circuit breaker was lifted in June, new launch sales activities went on a five-month surge. It hit a peak of 1,225 units sold in August 2020 which is a 28.3% increase over the 955 units sale recorded in August 2019.
According to data released by the Urban Redevelopment Authority (URA), prices of private residential properties increased by 0.8% in 3rd Quarter 2020, compared with the 0.3% increase in the previous quarter.
So what is in store for 2021? According to a report by PwC and the Urban Land Institute, there could be a correction in some property markets in the Asia Pacific region. Singapore, Tokyo, and Sydney were ranked as the top 3 real estate markets for investment. China, India and Australia were identified as likely “potential sources of stress.”
Below are the prospect rankings which are dominated by large, defensive markets with stable long-term outlooks. In fact, five of last year’s top six cities feature again in 2021’s survey.
Source: Emerging trends in real estate Asia-Pacific 2021 survey
2020 also saw interest rates at an all time low due to the Covid-19 pandemic. With all the news about the vaccine being developed and released in certain countries, interest rates are unlikely to stay as low as they are now. Central banks will once again raise rates to combat inflation and the Singapore Interbank Offered Rate (SIBOR) will rise.
With the vaccine readily available to all in Singapore by Q3 2021, as announced by the Singapore Government, the economic situation will get better and prices of goods and services will go up. When that happens, interest rates will be increased to discourage borrowing and bring things back to a more controlled level.
The URA announced on 15 December that new private home sales in Singapore rose by 18.9 per cent in November, reversing a decline in October. The uptick is expected to continue with an estimated 19 new developments to be launched in 2021.
Moving forward, many people are optimistic of the property market outlook and anticipate that sentiment should remain positive, with the opening of Phase 3 of the circuit breaker and the arrival and availability of the vaccine.
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