Property Market Outlook 2021

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Consolidating various views and thoughts from different analysts, they have agreed on how 2020 for property market have concluded:

  • Housing and Development Board (HDB) resale prices rose a third consecutive quarter by 2.9 per cent in the fourth quarter of the year — the highest quarterly increase in about 10 years — according to HDB’s flash estimates that were released on Monday (Jan 4)
  • The number of HDB flats that were sold for at least S$1 million hit a historic high. According to flash data released by real estate portal SRX on Thursday (Jan 7), there were a total of 82 million-dollar flats in 2020, eclipsing 2018’s record of 71 such deals.
  • The number of private home resale transactions hit more than 9,200 units by November, surpassing the overall private home resale deals of 8,949 for the whole of 2019
  • Private residential property prices grew by 2.2 per cent for the full year, according to the Urban Redevelopment Authority’s (URA) flash estimates that were released on Monday. This marks the fourth straight year of price increase

2 weeks has passed into year 2021.

What have happen in this short 2 weeks:

  • First Executive Condominium to be launched in the East (Tampines) in 8 years, indicative pricing in the upwards of $1,080psf, 08 Jan 2021
  • 12,000 visitors to Normanton Park Preview Launch, 15 Jan 2021

With most analysts calling Singapore property market will see the rise in prices in 2021, and our DPM, Mr Heng Swee Kiat mentioning that Singapore’s economy will go into recovery in the 2nd half of 2021, clients have been trying to rationalize the reason behind increasing property prices, defying the pandemic led weakness of the real economy.

My thoughts of rising asset prices including property is primarily around the concept of Reflation.

The economic definition of Reflation: a fiscal or monetary policy designed to expand output, stimulate spending, and curb the effects of deflation, which usually occurs after a period of economic uncertainty or a recession. The term may also be used to describe the first phase of economic recovery after a period of contraction – Investopedia

Would think that this would hold true especially since Governments globally have been doing on-going stimulus, whether its deferment in the collection of tax, tax cut, easing monetary policy, reducing interest rates. This would help to prevent the scenario of the depression-like drop in asset prices.

Would feel that this very first objective has been obtained. While global economy has slowed down significantly, we have not seen asset prices tank. You see stock prices increase 10,20 even 30%. Dow Jones even broke the all time high from the low of March 2020.

Translating to property prices, this would very much reflect what happened in the year 2020.

My guess is that this reflationary pressure will continue to “re-price” assets across investors’ portfolios of stocks, properties to everyday goods and services until the fundamental of the real economy finds its footing after this pandemic.

What this means to the investors will be very in-line with the property prices outlook of most analysts that property prices would be projected to increase in 2021.

What this means to the property buyers who feel that there will be a major tsunami drop in property, the risk of this happening might be greatly diminished even though there are recent increases in Covid cases globally, the introduction of Vaccines and that most Singaporean have learn to live with the Pandemic, have greatly mitigate this pandemic risk.

In fact, there is another risk this group of buyers should start to be aware of – Reflation Risk

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