2019 was a good year for the Singapore property market. In the private property market, over 50 residential projects were launched, and over 9,500 new homes were sold. In contrast, less than 8,800 new homes were sold in 2018. Prices were also about 2.5% higher than in 2018.
The healthy performance came amid the backdrop of uncertainty in the global economy, fuelled by the trade tensions between the US and China.
So how will the private residential property market perform in 2020? Here are 5 things you need to remember.
1. New private residential property prices will rise in 2020
Private residential property prices for new homes are expected to grow at between 2% and 4%, based on OrangeTee & Tie estimates. This is buoyed by positive buyer sentiment, as the global economy is expected to recover from 2019, and the trade war between China and US moves towards a resolution.
While the price growth is much lower than the 7% to 9% growth seen in 2019, it is a sign of the higher prices set in 2019.
“Many new projects are already transacting at new benchmark prices for their location and most developers may prefer to keep prices attractive to pare down their existing stock in view of other competitor projects,” says Christine Sun, Head of Research & Consultancy at OrangeTee & Tie.
2. New home sales in 2020 could be as healthy as 2019
According to OrangeTee & Tie research, 2020 will see far fewer mega projects – developments with more than 1,000 units – but that will not stop 2020 new home sales volumes from reaching the levels seen in 2019, estimated at between 9,000 and 9,800 units.
Interest rates and mortgage rates are expected to remain low in 2020. This would bolster housing demand.
At the same time, demand for new homes from new launches and previously launched projects is also likely to remain healthy as buyers who were previously sitting on the side lines could be motivated to enter the market as prices continue to rise steadily.
3. Many good housing options will still be available
Property buyers can expect to see nearly 30 new project launches, all within the first 6 months of the year.
Half of the new projects would be located in the prime Core Central Region, while the rest would be divided between the mid- tier and the mass market regions.
“More luxury home sales could be expected in the coming months as many projects in the prime location are slated to be launched this year. Some of the key project launches include The Avenir, Kopar at Newton and Van Holland,” said Sun.
4. Resale prices are set to increase in 2020
The demand for resale private residential homes was lacklustre in 2019, owing to the competition from new homes launched. “Some buyers may prefer to buy new homes as they are often equipped with smart home technologies, latest layout plans, newer design features, or more fanciful facilities,” explained Sun.
Total resale transactions were under 9,000 units in 2019, compared with the 13,000 transactions in 2018.
Moving into 2020, OrangeTee & Tie expects resale prices to grow by 1% to 3%, mirroring the demand for new home sales, with total volumes reaching between 8,000 and 9,000 units.
5. The private rental market could reach 2019’s record high
2019 was a headline year for the private residential rental market.
Rental volume for 2019 reached about 90,000 to 92,000 total transactions, a record 10-year high, while the rental index rose 2 to 3 per cent for the whole of 2019.
As of Q3 2019, the number of home completions was at a low of 7,933 units for 2019 while this number is projected to fall further to 5,122 units this year. The low inventory is expected to help prop up rental prices this year.
At the same time, as Singapore continues to be a highly favoured destination among tech firms that are looking to expand their digital footprint in the region, OrangeTee expects more expats to be deployed here, which could spur rental demand for homes in the prime and city-fringe areas.
To that end, private residential leasing volume may increase slightly to around 91,000 to 94,000 units in 2020 while the rental index rises by 1 to 3 per cent.