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Covid-19 Economy Impact

Revival of Singapore’s residential housing demand amidst pandemic

Article-Revival of Singapore’s residential housing demand amidst pandemic

Singapore's residential property market enjoyed relatively brisk activity in June 2020 that translated into an appreciable uptick in transaction volumes due to the reopening of its economy.

In June alone, new sales more than doubled to 998 units, up from 487 units in May. Developer sales continued to increase, reaching 1,080 units in July, the highest since November 2019. Meanwhile, overall private home prices rose by 0.3% quarter-on-quarter in Q2 2020, according to Singapore-based property consultant EDMUND TIE.

EDMUND TIE's senior director of research and consulting, Mr. Lam Chern Woon said, "The rebound could be attributed to the pent-up demand in June 2020 when the economy started to open up and show flats were allowed to resume operations."

"Underlying demand remains relatively strong, notwithstanding the sluggish economy, as buyers adopt a mid- to long-term view of the market to buy into well located and designed projects. Some developers have also offered 'star buys' and incorporated flexible design features and wellness into their designs, making them particularly attractive," commented Ms. Ong Choon Fah, EDMUND TIE's chief executive officer.

While travel restrictions have affected overseas demand, Singaporean purchases nonetheless made up for the slack, and accounted for 80% of non-landed residential sales in Q2 2020, up from 77% in the previous quarter.

Mr. Lam remarked: "The benign numbers we have seen so far are the result of the swift fiscal and monetary interventions by the government to bolster the economy, especially the sectors that have been more severely impacted by the pandemic."

"In particular, the property tax rebates for landlords with pass-throughs to tenants, various financing and wage support schemes for companies will help cushion the spate of job losses in the economy, while the property-related relief measures relating to ABSD remissions and loan repayments will take selling pressure off the market," he added.

Changing buyer preferences in Singapore

As buyers remained cost-conscious, the second quarter saw a significant increase in the proportion of apartment transactions under $1m, which increased 5 percentage points from Q1 2020 to 25% in Q2 2020.

Within the Core Central Region, a higher portion of transactions in the $2m - $3m price quantum was led by sales at Kopar at Newton. Meanwhile, the proportion of transactions in the $1m - $1.5m range in the Rest of Central Region was driven by sales of Parc Esta and Stirling Residences.

However, even as buyers gravitated towards a lower price quantum, there was nonetheless a decline in the proportion of transactions for units under 500 sq. ft: this category of apartments accounted for only 10% of total transactions, down from 14% in Q1 2020. On the other hand, the proportion of transactions for units between 500 and 700 sq. ft rose by 3 percentage points to 36% in Q2 2020.

Ms. Margaret Thean, EDMUND TIE's executive director of residential sales reports, "The shift away from compact units under 500 sq. ft to more spacious homes could be arising from the fact that more employees are working from home."

"Going forward, as remote working becomes more prevalent in the new normal, apartments would need to have multi-functional layouts that facilitate seamless transition across living, working, studying, and entertainment," added Ms. Thean.

Photo Credit: Peter Nguyen on Unsplash

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