Huttons' comments on market outlook 2022 | Huttons Group

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Huttons’ comments on market outlook 2022

Huttons Research

It was a fantastic year for the property market in 2021. Demand for new homes is expected to be around 13,000 units in 2021, 30.2% higher than 2020. It is the best performance in the new sale market since 2013. This is likely to reduce the number of unsold units in the market to around 15,000 which is lower than 16,929 unsold units in the previous trough in 2017 Q2.

In the resale market, volume in 2021 is estimated to be 20,000 units, almost double the volume seen in 2020. This is probably the highest volume seen in the resale market since 2007. Buyers are riding on the strong HDB resale market to upgrade to a private home. Covid-induced construction delays have forced buyers to turn to the resale market for their dream home.
Demand for homes in 2021 stemmed from the need for a bigger space due to work from home and home-based learning. Flush with liquidity from their profits in the financial market, buyers switched their focus to a physical asset like properties for stable returns.
The Core Central Region (CCR) stood out for its stellar performance in 2021. Investors snapped up units in projects in the CCR such as Irwell Hill Residences, Midtown Modern and Jervois Mansion. Ultra-luxury projects such as Park Nova and Les Maisons Nassim also sold units at benchmark prices. A penthouse at Les Maisons Nassim went for $75 million, making it the most expensive penthouse sold in recent years.
Ultra-high-net-worth individuals (UHNWIs) are finding value in Singapore’s luxury market which may be seen as a steal compared to other international financial centres. The business-friendly environment coupled with high quality of life and vaccination rate continued to attract wealth to the city state. The relatively low taxes are another plus point.
Best Selling Launches in 2021 (ranked by units sold)
In 2022, sales of new homes are constrained by the lack of new supply. Huttons estimate 41 launches (excluding Executive Condominium – EC) in 2022. While the number of launches is higher than 2021’s 23 launches, the number of units are much lesser at around 5,390. The new cooling measures on 16 Dec 2021 may see some launches pushed back and lesser units launched for sale. This will affect the sales volume.
Based on the number of units, 22% are in the CCR, 37% in the RCR and 41% in the OCR. Projects that may come onstream in 1Q 2022 include Belgravia Ace, Kovan Jewel, Royal Hallmark and The Arden. Two EC projects may be launch in 2022 – North Gaia in Yishun in Mar/Apr 2022 and another along Tengah Garden Walk. Some projects to look out for in 2022 include Jalan Anak Bukit, Lentor Central, Northumberland Road, Ang Mo Kio Ave 1, Liv@MB, Tanah Merah Kechil, redevelopment of Fuji Xerox Towers, AXA Tower and Flynn Park.
The new cooling measures will result in a knee jerk reaction immediately as everyone tries to understand and assess the impact. Volume could ease in the next 1 to 2 quarters in 2022 and recover subsequently. Investors like Singapore for its political stability and strong rule of law. First timers still make up the bulk of the demand and they are not affected by the cooling measures.
The enbloc market which had just picked up pace in the last couple of months is likely to slow down. The risks to developers have been increased by 10% to 35% should they fail to sell everything within 5 years. This is onerous on developers and enbloc hopefuls have to temper their expectations to increase their chances of a successful enbloc. The Government has ramped up its supply of land under the 1H 2022 GLS programme by 40.9%. This is the largest increase in percentage terms since 2H 2016. The Confirmed List will see a supply of 2,290 units (excl EC) which is the largest supply since 1H 2018. While developers need to replenish their land bank, the increased supply of land together with the cooling measures dampening demand will likely exert downward pressure on land bids. This will have an effect on the eventual selling price.
Quite a number of HDB upgraders sell off their HDB flats when they buy a new private property as they do not have the cash to pay ABSD upfront. Hence HDB resale volume could drop in the next 3 to 6 months as upgraders assess the situation. If conditions in the private market are stable and HDB resale prices maintain its growth momentum, upgraders are likely to cash out and upgrade to a private property.
The new home market may see sales between 8,000 and 9,000 units while prices may move up to 3% in 2022 on the back of higher construction costs.
With the country cautiously setting up more VTLs and experiencing strong economic growth in 2021, companies will bring in more professionals to work in Singapore and further support the rental market in 2022. The construction industry will also pick up pace once more workers come in and the supply of new homes will increase in 2022. The new cooling measures may convince more HDB upgraders to sell their flat and rent a place while waiting for the completion of the project. Rents may see another 5% to 10% growth in 2022.