To all readers and clients, here’s wishing you a Happy New Year, may 2020 be filled with health, wealth and happiness!
2019 was a year of stabilisation for the Singapore Property Market. After the July 2018 cooling measures, many property buyers were waiting to see how prices would move. Property Prices generally remained stable in 2019.
In this 2020 Property Market Scan, we will look at the potential trends for HDBs and Private Properties.
a. HDB
In 2020, HDB will roll-out up to 17,000 BTO flats to cater to expected increased demand, up from 14,600 units released in 2019.
It is further expected that there will be a larger number of resale flats being put on the market as more flats obtain their Minimum Occupation Period (MOP). In 2019, there were 30,000 HDB flats that obtained their MOP, while in 2020, there will be 25,000 HDB flats obtaining their MOP. These figures are much higher compared to 12,000 and 15,000 flats in 2017 and 2018 respectively.
Overall, this means that it is highly likely that 2020 will be a year of more HDB flats put up for sale, which means more supply.
This increase in supply is expected to be soaked up with the change in HDB CPF housing grants and income ceiling in 2019 which encourages as well as enables more first-time buyers to purchase HDB flats instead of private condos.
It remains to be seen how the HDB market will perform in 2020, some readers have asked for my opinion on what is likely to happen, and I will share my thoughts here.
I believe HDB resale transaction volumes will continue to increase while prices will remain stable with a slight upward bias. The recent HDB policies help stimulate the HDB market so that there is more demand, allowing HDB upgraders to cash out their flats and move forward with their upgrading plans.
b. Private Residential Market
Oversupply – has been the buzzword for the Private residential market in Singapore. The Media, Agents and Analysts are all talking about this topic. With about 50,000 new home supply created and more than 30,000 of the supply unsold, many are in panic mode.
As pointed out in a recent article I published, instead of worrying about oversupply, look at where the supply of properties are located and consider if such information will benefit you.
Pricing trends in the new properties are very interesting now. Prices in Sengkang hit $1800psf with the launch of Sengkang Grand Residences while Prices in Eunos have hit $1900 – 2000psf with the launch of Urban Treasures. These properties are selling at the same price as numerous resale condos in Prime Districts. Perhaps there will be some opportunities to pick up undervalued properties in some districts.
c. Government Policies
Understanding what the Singapore government wants can help us make better purchasing decisions. With the policies in place, I think it is safe to say that policy makers want to maintain mobility between HDB and Private Properties, while keeping prices from rising too fast. I believe the boost given to the HDB market and cooling measures for Private properties will help keep private property prices within reach for HDB upgraders.
It should also not be a surprise if the government adds more cooling measures over the next 2 years due to massive flood of cheap money still circulating in the global economy.
An article published by Edgeprop titled “Deferred losses for recent sellers at OUE Twin Peaks” pointed out that eight units at OUE Twin Peaks registered losses after their sale in 2018 and 2019. Four of the eight loss-making transactions were units purchased during the re-launch of Twin Peaks with deferred payment of 3 years offered. Buyers could take up the deferred payment if they needed time to sell their current home or to obtain financing or from heresay then, some just thought that the government would potentially review cooling measures like the ABSD. I personally do not believe that the ABSD will be removed in the next few years, but it should not be a surprise if higher ABSD is implemented.
d. Outlook 2020
To sum up, I think the property market in 2020 will remain stable and “boring” for both HDB and Private property. Just the way the government would want it.
With all the above information, can you still profit from the Singapore Property Market then? I believe so.
There are still property owners who had bought properties between 2013 to 2017 and made profits.
The question now is:
- Did they time the market?
- Did they buy a firesale?
- Did they all buy a property in front of an mrt?
The answer is no to all of the above.
So what did they do?
I believe they identified where and what the “smart money” and demand would go and were positioned for it without taking a lot of risk (or you could say by being lucky). Will be sharing more about this throughout 2020, so if you are keen to find out more, stay tuned for future articles on this.