Lawrence Wong announced on 16 May 2020 that new HDB BTOs and properties will be priced higher in future due to higher costs of construction brought about by Covid.
1. Higher Construction Costs:
The measures to keep Covid-19 transmission low in the construction sector are bound to increase costs for contractors, which they will have to bear in principle. National Development Minister Lawrence Wong said at a press conference on 16 May 2020 that construction costs will rise as a result, and all in Singapore must be prepared to bear them.
The measures to keep Covid-19 transmission low in the construction sector are bound to increase costs for contractors, which they will have to bear in principle. National Development Minister Lawrence Wong said at a press conference on 16 May 2020 that construction costs will rise as a result, and all in Singapore must be prepared to bear them.
Pent up demand immediately caused property prices to increase after lockdown in China
2. Pent Up Demand:
We see a lot of pent up demand accumulating from the 1st half of this year as the usual yearly demand for properties build up during the Covid pandemic where viewings were reduced and eventually stopped during the circuit breaker period.
Huttons Asia's real estate professional Kiwi Lim said "property buyers after enduring for the first half of the year released some pent up demand when sales picked up during circuit breaker period to exceed pre-circuit breaker period sales even though buyers were not able to physically view showflats but had to buy only thru online viewings. This is unprecedented and an amazing show of strong market demand.
We see a lot of pent up demand accumulating from the 1st half of this year as the usual yearly demand for properties build up during the Covid pandemic where viewings were reduced and eventually stopped during the circuit breaker period.
Huttons Asia's real estate professional Kiwi Lim said "property buyers after enduring for the first half of the year released some pent up demand when sales picked up during circuit breaker period to exceed pre-circuit breaker period sales even though buyers were not able to physically view showflats but had to buy only thru online viewings. This is unprecedented and an amazing show of strong market demand.
Pent up demand in the market see sales of new launches during Circuit Breaker exceed pre-Circuit Breaker period.
Vicky Zhao's husband bought $28 million Ardmore Park last month in April 2020
3. Foreigner buyers returns
Huttons Asia's property analyst Kiwi Lim said "foreign buyers have always made a splash in our real-estate property market and during this Covid pandemic, Singaporeans see a rare period where the majority of foreign buyers are absent as they are locked down in their own countries, resulting in only a small trickle of foreigner purchases, e.g. Vicky Zhao's purchase last month. These foreign buyers will return once the dust settles over Covid."
Huttons Asia's property analyst Kiwi Lim said "foreign buyers have always made a splash in our real-estate property market and during this Covid pandemic, Singaporeans see a rare period where the majority of foreign buyers are absent as they are locked down in their own countries, resulting in only a small trickle of foreigner purchases, e.g. Vicky Zhao's purchase last month. These foreign buyers will return once the dust settles over Covid."
These cooling measures previously implemented by the government successfully prevented a bubble in Singapore's real estate forming a very stable asset class even during such unforseen crisis like the Covid pandemic
4. New Singapore Permanent Residents (SPR)
Each year, we have around an estimated 30,000 new permanent residents in Singapore and these new SPRs are not eligible for BTOs and they have to wait 3 years before they can buy a HDB resale flat. Many of them are urgent to own a property and therefore chose to buy a private condo instead. This group of new SPRs this year have also been holding back their purchase due to Covid and their demand for property will accumulate to coincide with the new batch of 30,000 SPRs next year to search for their dream homes.
5. Many Enbloc Buyers Are Still Actively Looking
More than 10,000 millionaire households were created during the 2017 and 2018 enbloc fever. Less than half of these owners had made their move to buy properties with their new wealth derived from property. The other half is expected to make their move soon.
Each year, we have around an estimated 30,000 new permanent residents in Singapore and these new SPRs are not eligible for BTOs and they have to wait 3 years before they can buy a HDB resale flat. Many of them are urgent to own a property and therefore chose to buy a private condo instead. This group of new SPRs this year have also been holding back their purchase due to Covid and their demand for property will accumulate to coincide with the new batch of 30,000 SPRs next year to search for their dream homes.
5. Many Enbloc Buyers Are Still Actively Looking
More than 10,000 millionaire households were created during the 2017 and 2018 enbloc fever. Less than half of these owners had made their move to buy properties with their new wealth derived from property. The other half is expected to make their move soon.
6. Developers Have Lesser Land Banks
Developers have launched around an estimated 2 / 3 of their available land banks bought during the enbloc fever and will have lesser new condo projects to launch in the next few years.
7. Circuit Breaker Creates New Demand
Families are required to stay home during this recent Circuit Breaker period and such an extended period of being at home with the family has caused enormous friction among family members resulting in more enquiries for properties as adults decide to finally move out after procrastinating for years.
Developers have launched around an estimated 2 / 3 of their available land banks bought during the enbloc fever and will have lesser new condo projects to launch in the next few years.
7. Circuit Breaker Creates New Demand
Families are required to stay home during this recent Circuit Breaker period and such an extended period of being at home with the family has caused enormous friction among family members resulting in more enquiries for properties as adults decide to finally move out after procrastinating for years.
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8. Future GLS
We are seeing a new trend for GLS sites as government now require developers to include extra ancillary works from developers when they bid for Government Land Sales (GLS) to also require developers to build roads, parks, bus interchange, community centres, etc. These will result in higher costs and take up part of the land area therefore transferring the higher cost to buyers eventually.
We are seeing a new trend for GLS sites as government now require developers to include extra ancillary works from developers when they bid for Government Land Sales (GLS) to also require developers to build roads, parks, bus interchange, community centres, etc. These will result in higher costs and take up part of the land area therefore transferring the higher cost to buyers eventually.
Can you imagine what will happen to market sentiment if a cure or vaccine for Covid is discovered tomorrow?
If you enjoyed reading the analysis above or if you are keen to hear more from Huttons Asia's Kiwi Lim on his real estate market analysis for your asset progression, you may Whatsapp 9386 4036 to arrange for an insightful Zoom online session with him.
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