Huttons’ comments on URA and HDB 2020 numbers
Private home prices increased 2.2% for 2020 or an average of 0.5% per quarter. This is a relatively mild increase compared to 2019 and 2018. It shows that government policies are still effective in curbing prices and ensuring a stable market.
Similar to the economy where growth was uneven across sectors in 2020, the performance of the property market is not uniform. Prices of non-landed homes in the CCR are still soft in 2020 compared to 2019. Likewise, while the rental market is showing initial signs of bottoming out, it is not out of the woods yet.
The curb on re-issue of options on 28 Sept 2020 is showing initial signs of working. The numbers of options not exercised have come down significantly. The difference between the preliminary monthly developer sales figures and the final quarterly sales figures have narrowed to 42 or 1.6% in 4Q 2020. This means that almost 99% of buyers have the finances to commit to a purchase.
Table 1: Comparison of Monthly Developer Sales against URA Quarterly Developer Sales
Source: URA, Huttons Research
The number of uncompleted unsold units have decreased from the peak of 36,839 in 1Q 2019 to a new low of 24,296 units in 4Q 2020. This means that the number of new projects in the pipeline are not able to catch up with demand. Developers are running down their inventory of unsold units and will look to build up their landbank in 2021. The en-bloc market is also stirring with more owners enquiring about selling their homes.
Barring unforeseen circumstances, the property market could see sales up to 9,000 new sales and a price increase of 1 to 3% in 2020. The slightly lower sales volume is due to less units being launch for sale in 2020.
In the HDB resale market, prices appreciated by a record 5% in 2020, the largest annual price increase since 2012.
Resale volume have climbed higher in 2020 due to pent-up demand and buyers switching over to the resale market because of longer completion period in BTO launches.
This is a by product of the huge BTO launches that the Government launched for sale in 2011 and 2012. Many of these flats have reached their minimum occupation period and some of the owners have opt to cash out and move to another property.
Newer flats tend to command a premium over older flats and with the sales of such flats making up a bigger proportion in 2020, they play a significant role in pushing up the overall price index.
Buoyant conditions in the HDB resale market are expected to stabilise in 2021. More private homes are expected to be completed in 2021 and upgraders will be seeking to sell their flat to qualify for ABSD remission.
Should there be more control measures, it will affect the HDB resale volume in 2020 as HDB upgraders account for quite a number of private property transactions.
We could see transaction volume between 23,000 and 24,000 flats and price growth between 0 and 2% in 2021.
Table 2: Comparison of Transactions by Age and Year
Source: data.gov.sg, Huttons Research