“Singapore residential property market remains resilient despite downturn.”
“HDB resale prices up for the fifth straight month in November 2020.”
“Number of HDB resale flats sold for at least $1m hits new high, 72 in first 11 months of 2020.”

Never mind the pandemic. Judging from these online news headlines, the local property market seems to be buzzing. It defies all logic. Isn’t the global economic crisis causing companies to close and people to lose their jobs or take pay cuts? If you’re a homebuyer hoping for HDB resale flat prices to head south, here are three reasons why this may not happen any time soon. 

1. COVID-19 MAY HAVE UNWITTINGLY PUSHED SOME OF THE DEMAND FROM BTO TO THE RESALE MARKET 

Covid-19 brought all construction projects to a temporary stop during the circuit breaker. Even though work has resumed, it has caused delays. This could have put off some potential Build-to-Order (BTO) buyers.

“Some demand could be drawn from the BTO market because many flats were expected to be completed in four to five years. The long waiting period may have driven some buyers to the resale market, “says Kelvin Leong, senior associate director at Orange Tee. “Moreover, as many BTO launches were heavily subscribed, unsuccessful candidates may have had to turn to the resale market as an alternative.”

Po-Yu Low, senior marketing director at ERA Realty Network, agrees. “Young couples don’t want to wait that long. In previous years, I have seen friends who balloted multiple times but failed to get a BTO flat. They went on to buy resale flats.”

Due to the work or working from home (WFH) situation, some also want to move out of their parents’ houses to work more comfortably.

Due to the work or working from home (WFH) situation, some also want to move out of their parents’ houses to work more comfortably, adds Po-Yu. “As working from home will likely continue, this will spur some to even shop for bigger homes. For a more affordable price tag, this means getting an HDB flat rather than a condo.”

For one couple, who had originally planned to stay with their parents while waiting for a BTO flat, WFH was the straw that broke the camel’s back. Cherilyn Lim, 27, and her 28-year-old fiance changed their minds about getting a BTO flat after he, his two siblings and both parents had to work from home during the circuit breaker.

For one couple, who had originally planned to stay with their parents while waiting for a BTO flat, WFH was the straw that broke the camel’s back.

“It was quite uncomfortable fitting everyone into a four-room flat at the same time. Even looking for spare table space or a powerpoint plug was challenging! With all of us still working several days a week from home for the foreseeable future, and while we wait to see how Covid-19 pans out this year, we cannot imagine squeezing me into the household,” says Cherilyn.

They are now actively viewing resale flats and plan to use their savings on their home instead of on a big wedding. “It’s hard to meet all the regulations for a banquet anyway, so we intend to register our marriage, renovate and move into a resale flat first. We’ll plan for a wedding dinner in future,” she adds. 

2. PENT-UP DEMAND FROM BUYERS 

According to Kelvin, the HDB resale market posted “a stunning rebound in Q3 of 2020, after clocking historically low sales in April and May”. This could have been due to house viewings being barred during the circuit breaker. For the overall price index rose by 1.8 per cent.

“This could be attributed to many newer HDB flats being sold in Q3. As these tend to have a premium over the older ones, the overall price index could have been elevated by the newer flats,” he ays.

Some sellers raised their asking price when they saw that the demand for housing had returned and that buyers had flocked back to the market after the circuit breaker. As a result, sales rebounded from June and remained above 2,400 units per month for four consecutive months. “The strong sales indicate that the demand for resale flats remains healthy despite the pandemic,” sums up Kelvin.

“The strong sales indicate that the demand for resale flats remains healthy despite the pandemic.”

kelvin Leong, Orange Tee

Upon reading such statistics, some sellers may think the market is very buoyant. However, they need to delve deeper and ask their real estate adviser to crunch the numbers, says Po-Yu. For example, her client who was looking to sell his four-room HDB flat in Pasir Ris saw a 1.5 per cent price increment in Q3 2020 over the previous quarter.

Based on his asking price of $400,000, that worked out to only a $6,000 increment. “Sellers must ask themselves how long they want to wait,” she advises. “For a $6,000 increase, some may only want to wait one or two months before they make a decision.”

For upgraders, this may be particularly important. Your delay for that extra $6,000 may translate to a much higher buying price for your next home, too. Finally, just because the resale price index shows an overall price increment, this may not necessarily mean that your unit can fetch the same increase, too. Every flat’s selling price differs according to its location, age, orientation, renovation and so on. 

3. WHEN YOU GOTTA BUY, YOU GOTTA BUY 

At the end of the day, HDB flats are the bread and butter of Singapore’s property market. “HDB flats are not meant to reap huge profits, so the increment margin is very limited,” says Po-Yu. She has seen a mixed bag of buyers and sellers.

Co-broke agents have told her about deals that burst because the sellers asked for high cash over valuation, which buyers were not ready or willing to pay. “Those with genuine needs to sell and buy will still go ahead.”

One homeowner and her family, who asked to remain anonymous, recently sold their 1,100 sq ft, three-bedroom condo in central Singapore. They bought a spacious five-room flat in Toa Payoh that is almost 1,400 sq ft in size. “We wanted the extra space so we could build an extra bedroom to give our kids a room each,” she explains.

“HDB flats are not meant to reap huge profits, so the increment margin is very limited.”

Po-Yu Low, ERA Realty Network

Although they’d paid almost $1m for the top-floor unit, they felt it was a reasonable price as it is bright and breezy, and enjoys an enviable city view. Best of all, they love the amenities such as the popular hawker centres nearby. It is also a stone’s throw away from the MRT station.

For this family, buying, selling and renovating a new home during the COVID-19 period was a bit of hassle, but it was all worth it. Cashing in on their condo, which had doubled in price since they’d bought it over a decade ago, also allowed them to pay for the HDB flat in full. 

Kelvin’s experience with his clients has shown that the pandemic and economic uncertainties did not stop Singaporeans from upgrading last year. “Many of my clients sold their BTO flats immediately after meeting the five-year Minimum Occupation Period (MOP) to lock in the returns while their flats are still new. Many have upgraded to private homes or bigger flats in recent months.”

SO, WILL HDB PRICES CONTINUE TO RISE IN 2021? 

Po-Yu and Kelvin think that the spillover demand from 2020 will continue to drive prices upwards. They expect to see an increased volume in the resale market, resulting in slightly increased prices for resale flats.

“While many market watchers were expecting the property market recovery to be a long one, the HDB resale market has avoided a major correction this year and sales have rebounded stronger than expected,” says Kelvin, who cites the record low interest rates and aggressive stimulus packages released globally as factors that may continue to prop up the housing demand.

So, should buyers wait for a better price or buy now? It depends on how fast you need your new home.

So, should buyers wait for a better price or buy now? It depends on how fast you need your new home, both agents say. On the whole, Po-Yu feels that while Singapore is still in the recovery period, it is a good time for first-time homeowners to buy before the economy and property market rebound totally. 

“Sellers are more willing to negotiate. Prices may have gone up but the market is still recovering,” she explains.“It is still more of a buyers than a sellers market.”