SINGAPORE (EDGEPROP) - The number of private new homes sold in Singapore in 2Q2020 fell 20.3% to 1,713 units from 2,149 units in 1Q2020, according to URA data.
The secondary market registered a steeper quarterly fall of 55.1% to 933 units sold in 2Q2020 from 2,080 units in 1Q2020.
Overall, total sales volume fell by 37.6% in 2Q2020 to 2,664 units, marking the third consecutive quarterly decline since 3Q2019 when 5,763 units were sold.
Meanwhile, prices of private homes rebounded 0.3% q-o-q in 2Q2020, after falling 1% q-o-q in 1Q2020.
The rebound was due to pent-up demand observed in the later half of June as showflats began to reopen, says Leonard Tay, head of research at Knight Frank Singapore.
“The ‘circuit breaker’ in April seemed to stop activity in the private residential market. However, new home sales volume picked up from the end of April as buyers got used to ‘transacting-from-home’, increasing by 75.8% from April to May, and then more than doubling between May to June when showflats were allowed to reopen on June 19,” says Tay.
In 1H2020, overall prices dipped by 0.7%, approximately six months after the onset of the coronavirus in Singapore, notes Christine Sun, head of research & consultancy at OrangeTee & Tie.
“While the price decline in 1H2020 looks reminiscent of the 2008 and 1997 economic crises, the current correction did not seem to be as severe as initially feared,” says Sun.
“Comparatively, the URA price index dipped 4.6% from 2Q1996 to 4Q1996, around six months into the Asian Financial Crisis. Prices had similarly declined 8.3% from 2Q2008 to 4Q2008 during the first six months of the Global Financial Crisis,” she adds.
The rental market has also been impacted by border controls and travel restrictions, registering a 1.2% q-o-q and 1.1% y-o-y decline in 2Q2020.
So far, the bulk of the rental volume has been due to renewals, says Sun. “Many tenants chose to renew their contracts to avoid the hassle of scouting for new housing. Some faced difficulty arranging house movers during that period should they choose to rent another place.”
There has also been an uptick in Singaporeans renting apartments. “Some are singles who were moving out to enjoy greater privacy while others needed a more conducive environment to work from home. Some were also renting small apartments with friends as they were used to living independently overseas but are now back in Singapore for local work assignments,” says Sun.
It is likely that domestic demand may continue to support the property market, she adds. Based on URA data as at July 24, Singaporeans comprised 80.4% of the buyers for non-landed homes in 2Q2020, the highest proportion since 1Q2009, when locals made up 82.5% of the buyer pool.
Foreign buying interest from Permanent Residents (PR) and non-PRs also remained healthy. Although the number of condos bought by foreigners slipped when compared to last year, triple-digit sales were completed last quarter: PRs purchased 348 units while non-PRs bought 121 units.
Sun expects property prices to remain soft in the coming months, forecasting an overall dip of up to 5% this year. She expects 14,500 to 16,800 private homes could be transacted this year, of which new home sales may constitute around 7,500 to 8,500 units.
Looking ahead, “the combination of a low interest-rate environment, liquidity in the market and sweeteners in the form of selective discounts, should generate transactional activity in the 2H2020,” says Knight Frank’s Tay. However, he cautions that a “recovery is far from certain with the spectre of the virus still looming”.
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