Huttons’ comments on URA and HDB 3Q 2020 numbers

Sales volume in 3Q 2020 at 7,047 units is 164.5% higher quarter-on-quarter and 22.3% higher year-on-year. It is the highest sales volume seen since 2Q 2018.

Stronger than expected demand in the property market pushed uncompleted unsold units to its lowest level in more than two years. Resale volume also jumped more than 3 times in 3Q 2020 from the previous quarter.

As supply decreased, sellers were emboldened to increase their asking prices and that led to higher prices in 3Q 2020.

While Singaporeans continued to make up more than 80% of purchases, there was a near doubling of foreigners from 119 in 2Q 2020 to 225 in 3Q 2020 buying properties in Singapore despite the travel restrictions. They were probably drawn to the strong economic fundamentals and stable political environment. More foreign companies setting up operations in Singapore could be another reason. The low interest rates could be another pull factor.

Declines in rents slowed in 3Q 2020 as Singapore exited its circuit breaker and resumed economic activities. However the rental market is expected to remain soft in the coming quarters as limited growth in new tenants and higher vacancy will pressure rents downwards.

Moving ahead, the property market is likely to take a breather from the dizzying sales volume in 3Q 2020. There will be a knee jerk reaction due to the new regulation from the Controller of Housing on the reissue of options. In the resale market, volume may be constricted due to Government relief measures that gave sellers more time to sell their properties.

New sales is expected to be between 9,000 and 9,500 units, slightly lower than 2019’s 9,912 units and prices may increase up to 0.5% for 2020.

The HDB resale market roared to life in 3Q 2020. Resale volume at 7,787 flats was the highest in ten years. The previous high of 8,205 flats sold was in 3Q 2010.

Buyers flocked to the HDB resale market as they favoured living space and affordability in the current economic climate. Supply of resale flats in the quarter was lower as some upgraders held back from selling their flats because of the 6 months extension for ABSD remission from the Government.

As such, there were slightly more buyers than sellers in 3Q 2020 and competition for resale flat heats up resulting in higher prices.

The same cannot be said for the HDB rental market as job losses led to lower rental volume. Rents however saw an increase on average of 2.7%. This could be due to more tenants choosing to share a room with their colleagues for affordability reasons. Woodlands saw the biggest jump in rents due to more Malaysians renting flats in the area for its proximity to Johor.

HDB resale prices may continue to climb in the coming quarters due to lower supply because of supply side conditions such as longer completion period for BTO flats and ABSD relief. In 2020, HDB resale prices may increase up to 2.5%, the largest price growth since 2012.