Singapore Property Trends for 2020

With the start of a new decade comes a new wave of trends that impact the property market. For 2020, we’re looking at how international markets are reacting to both internal and external factors and how the performance of the market is set to react as a result.

UK property continues to suffer from chronic undersupply but foreign investment is on the rise, demonstrating the competitiveness of regional cores throughout the country. 

While the typically popular choice, London, is still failing to reach heights it did previously, other towns and cities up and down the country are seeing much more effective performance. 

In Singapore the outlook is best described as ‘steady’. Even as the economic outlook has darkened and international relations with nearby China have been rocky to say the least, the residential sales market has been relatively stable. 

As part of our wider 2020 trends forecasting, we’re examining the outlook for the Singapore markets throughout the rest of the year and beyond, as well as some of more general global property trends set to take hold in the new year. 

Singapore Remains Resilient

The second half of 2019 was positive for developers in Singapore, who sold nearly 30% more homes between July and November than they did in the first half of the year. At the same time, the Urban Redevelopment Authority’s property index highlighted growth in Q2 and Q3 of 2019, completely overturning losses that occurred in the quarters before. 

All of this happened despite market cooling measures being in place, demonstrating the resilience of the market.

It’s predicted that this momentum could continue, providing Singapore’s economic activity recovers and meets projections. This situation would also reinforce forecasts highlighting that prices could remain stable in 2020.

‘Modest’ Price Rises

According to Fitch Ratings, a global credit ratings agency, Singapore residential prices are expected to grow by around 2% in 2020 and 2021, down from 2018 but around the same level as 2019.

In their 2020 Global Housing and Mortgage Outlook report they expect “home price growth to reflect the recovering real GDP (gross domestic product) growth rates of 1.5% in both 2020 and 2021 after growth decelerated to 0.6% per cent in the first half of 2019”.

This follows the property cooling measures introduced in July 2018 before prices rebounded in the second quarter of 2019. Fitch Ratings has since projected minor growth for the rest of the year, driving many investors to consider overseas markets for their investments. 

Rising Foreign Buying Expected to Continue

Research by PropertyGuru has shown that the Singapore luxury market outperformed expectations in 2019 and its expected to continue in 2020 as a new development pipeline hits the market. This will create intense competition for developers to build high-end properties that can then be sold for much more lucrative prices. 

It’s expected that the ultra-luxury market will enjoy sustained interest from Chinese national buyers, particularly as Singapore is viewed as a safe and stable country for wealth preservation.

Economic Issues Are a Worry

Over the last three years, property asking prices have risen by 12% but the gross monthly income for Singapore workers has only increased by 7%, creating an ‘affordability gap’ for private properties. 

With GDP growth in Singapore expected to remain subdued over the next year, there are concerns that this gap may widen.

That said, while Singapore is seeing a lot of attention from investors, it remains an incredibly exclusive market. As the second most expensive property market in the world with property prices averaging at $874,372 / £674,809, it’s a high barrier for entry. 

This is just one of the reasons that investors are looking overseas for their investments, seeking out more affordable properties in high-performing, stable areas such as the UK. With uncertainty less of an issue in the market post-2019 General Election, investors are free to take advantage of rapidly rising property prices.

While it’s expected that Singapore’s ultra-luxury market will continue to perform, investors that are looking for a more affordable, long-term and robust investment asset should consider the strength of the UK market as a signpost for the future, especially as undersupply drives prices and creates a competitive environment.