Singapore’s residential property market has proven to be one of the few recession-proof sectors amid a pandemic that has plunged the city-state’s economy into its worst-ever contraction.
Analysts say this is due in large part to a slew of cooling measures to curb speculation and ensure that home buyers do not over-leverage, coupled with massive government stimulus to save jobs and prop up the economy.
This is borne out by continued growth, both in the Urban Redevelopment Authority’s private home price index and the Housing Board (HDB) resale price index.
The private home price index grew 0.1 per cent in the first nine months of this year compared with 2.1 per cent growth last year, and minus 5.2 per cent during the 2009 global financial crisis.
With the economy bottoming out, prices should stabilise in the near term, with a flat to one per cent growth seen for this year, analysts said.
This is unlike the situation in 2009 when the private home price index plunged nearly 25 per cent from the second quarter in 2008 to the second quarter in 2009.
Back then, the property bubble burst after it was fed by loose monetary conditions and rampant speculation in the years before the crisis, noted Tricia Song, Colliers International’s Singapore research head.
Meanwhile, the HDB resale price index has had six straight years of decline, but is poised to defy the pandemic and post the strongest annual growth since 2012.
HDB resale prices jumped 1.8 per cent in the first three quarters of this year – a turnaround from the price drop of 0.4 per cent in the same period a year ago.
With demand expected to stay robust, HDB resale prices could grow by 2.5 to three per cent this year, said Wong Siew Ying, PropNex’s head of research and content.
Analysts say a slew of HDB policy changes rolled out in the past two years are taking effect, and newer resale flats in Dawson and Tiong Bahru that have reached the minimum occupation period are being sold at higher prices.
More of these newer flats have also been sold. Around 27 per cent of flats sold in the first nine months of this year had a lease of 90 years or more, up from 19 per cent in the same period last year, Wong noted.
Song said a big boost also came from the government dishing out close to S$100 billion (US$74.7 billion) over four stimulus packages this year, including the Jobs Support Scheme, as well as legislating temporary measures on moratoriums or waivers on commercial rents, home mortgages and interest payments.
Wong added that property curbs – including the total debt servicing ratio rules, additional buyer’s stamp duty and lower loan-to-value limits – that were imposed in recent years had also put the property market on a more stable footing ahead of the pandemic.
The HDB resale market got a lift from policy changes, said Christine Sun, OrangeTee & Tie’s head of research and consultancy.
These include allowing buyers greater flexibility in using their Central Provident Fund (CPF) monies to buy older flats, enhancing the CPF Housing Grant, raising income ceilings and allowing larger home loans for eligible buyers.
The measures helped boost HDB resales to 7,787 units in the third quarter of this year – the highest quarterly sales since the third quarter of 2010 when 8,205 units were transacted, Sun added.
Song noted: “HDB prices now look relatively attractive after having fallen 12.4 per cent from 2013 to 2019, compared with the private home price index, which fell 2.1 per cent.
“Now that HDB resale prices have adjusted, it could start to track the private home price index and the general household income growth.”
Sun said HDB resale prices outpacing private home prices by such a large magnitude is an exception rather than the norm.
PropNex said HDB resale prices and transaction volumes are also fuelled by factors such as demand being diverted from the Build-To-Order market due to pandemic-related delays in construction and completion of new flats.
Wong said a new housing grant of up to S$160,000 for first-time buyers of HDB resale flats also helped push up sales.
She said: “Amid a dreary economic outlook, some buyers also went for more affordable options in HDB resale.
“We expect the sales momentum to continue in the fourth quarter, with total HDB resale volumes hitting above 23,000 this year. But it is not likely to test the 2012 high when resale volumes crossed 25,000.”
THE STRAITS TIMES (SINGAPORE)/ASIA NEWS NETWORK