En Bloc Singapore 2020

This Won’t Discourage Some Property Owners Going for Collective Sales

Will 2021 Gets Better? Read On…

The Covid-19 pandemic has hit the en bloc market in Singapore with a sledge hammer. The entire market for collective sales has come to a grinding halt since the pandemic started early this year.

According to the market analysts, this year has seen only 17 launches so far (6 Sites Currently on Sale) and only one deal (Yuen Sing Mansion – Successful Sale Completion) has gone through till August.

(Latest Update: Fairhaven & Sophia Ville Advance Apartment Lorong N Telok Kurau SOLD!)

These numbers are disappointing according to Market Analyst who compared these figures to 40 launches and six successful deals by the same time in 2019.

The en bloc market was already struggling after the New Cooling Measures were announced in July 2018 which has increased the acquisition cost for the developers and slowed down the market.

The pandemic has come as a last nail in the coffin which is nearly killed all positivity in this collective sale market.

According to Market report, the Cooling Measures had killed off the demand in this segment as developers went into a cautious mood in terms of increasing their land bank and Covid-19 has taken this cautiousness to a new level.

However, what will bring the en bloc market back to life is an effective Covid-19 vaccine which many believe.

Mr. Ismail Gafoor, PropNex’s CEO also spoke on similar lines and sounded an alarm that this mood is likely to extend for a longer duration until 2022 when the 28,000 unsold units are bought by property buyers.

Almost all property analysts agree to the fact that most of the new en bloc properties launches that have come through in the recent months have been small projects which doesn’t increase the quantum of risk for the developers.

Some market experts are looking for positive signs in the market and they say that most owners haven’t dropped their asking price.

This is driven by the cost of replacement homes which continue to remain expensive and hence owners cannot afford to reduce the asking prices of their properties.

This is the reason asking prices haven’t changed since the pre-COVID-19 levels. This has led to a widening of the gap between the price expectations and what developers aren’t willing to bite in this market. (They went for GLS Sales)

In this typical scenario most sellers tend to adjust their asking process based on the transaction prices for new launch units or resale units and these haven’t shown a downward trend yet.

In fact, price comparisons for private residential properties have seen only a 0.7% drop since the first two quarters.

This indicates that the property market is still stable and hasn’t been hurt largely by the pandemic.

This is the reason why property sellers don’t see any urgent call to reduce their asking prices.

However, there has been some exception for example Fairhaven where the owners did actually bring down the actually adjusted their asking price downwards.

The freehold property has now been launched along with Sophia Ville site with Fairhaven (Combine) price being S$44.7 million.

The new price is lower than the previous price owners had asked for in 2018 which is S$57 million when they failed to find a bidder.

This is also lesser than their first attempt (S$45 million) back in 2015. Owners are realistic in this collective sale market and unlikely to go any lower than this base price.

Residential Market is Going North Again

Despite the economic uncertainties due to the Covid-19 pandemic, the property market in Singapore is showing signs of revival with the third quarter of 2020 registering good sales.

Even though there were bare minimum sales in Q2 of the year, in the third quarters things seem to be improving as there is an increase in demand for homes – both in the private residential sector as well as public housing.

In the last quarter of the year, sales are likely to drop as authorities have clamped down the re-issuing of OTPs or Options to Purchase.

Despite these fore-warnings, the year that has unexpectedly been hit by a pandemic that has also impacted economic activities, transactions have not been bad.

Residential Private Properties
Though the sale of private house prices remained unchanged even after what the flash estimates (which were released last month), Singapore has seen a rise in sale by 0.8% in the third quarter of 2020.

According to URA or Urban Redevelopment Authority’s statistics related to real estate that was recently released, the third quarter registered an increase in price. This was the 2^nd straight such occurrence due to the 0.3% growth that was tracked in the 2^nd quarter of 2020.

Altogether, the Property Price Index as revealed by URA rose by 0.1% in the 9 months of 2020, when calculated from the end of 2019.

In the second quarter of 2020, there were 211 landed home deals which rose by 183.9% in the 3^rd quarter with a sale of 599 similar properties, revealed the Realis data.

In the Landed Property sector, there has been an increase in price which was seen in the third quarter as the values of homes rose by 3.7% from the second quarter. This occurred primarily because of the strong demand for landed homes.

In the Non-Landed Property segment, prices rose by 0.1% QoQ (quarter-on-quarter) in the third quarter of 2020. This occurred mainly due to Rest of Central Region and Outside Central Region holding up their prices.

RCR or Rest of Central Region showed an increase in home prices in QoQ by 2.5% in the 3^rd Quarter with the launch of new housing projects such as Penrose, Forett at Bukit Timah, Noma, Verdale and Myra. They continued to support values.

In the Outside Central Region or OCR, the prices of non-landed homes increased by 1.7% in the Quarter-on-Quarter as there was a healthy demand by local home users for HDB upgrade properties. This continued to improve sales.

It must also be noted that according to the private residential property, the last quarter hit a new high with an improved reading of 180.4 in the 3^rd Quarter, 2020.

However, in the CCR or Core Central Region things went against the trend as prices of homes in the 3^rd Quarter of 2020 QoQ fell by 3.8%.

This likely occurred as prices of homes in the resale market was soft. Foreign buying in the CCR was also limited with numerous travel restrictions still in place.

From January to September, 2020 almost 80% new homes have been sold to Singaporeans. According to Realis data, Singaporeans purchasing private homes has been the highest since 2010. 

There could be another reason why there has been a strong sale of properties. Singaporeans are confident of the country’s economic recovery even as a new normalcy sets into place.

Analysts believe that while sale of private homes will continue, there will be a slight slump in the final quarter of the year. According to trends seen in the market, the clampdown on OTPs re-issue will slightly dampen sales in the upcoming months.

From January to September, 2020, altogether there has been a sale of 13,980 private properties. There has also been a huge interest in the resale market and if things continue this way, then by the end of the year there will be at least 19,500 sales. This will exceed the 19,150 homes that were sold in 2019.

Prices of private houses will continue to remain stable and can potentially rise by another 1%. Prices will remain stable because of many factors such as debt freeze programmes, unchanging interest rates, and support programmes that are in place to back-up jobs which will further motivate home buyers to look for new properties.