The economy is still not out of the woods following the COVID-19 pandemic’s unceremonious disruption last year. Even so, with the COVID-19 vaccination rolling out and businesses adapting to the new normal, both the property market and the economy are showing signs of recovery this year. For residents living in Punggol, will 2021 be the year to sell your flats?
This year alone, approximately 10,000 Punggol and Sengkang flats are expected to enter the resale market as many homeowners fulfil their Minimum Occupancy Period (MOP). While it is hard to say exactly how the property market will turn out this year, we’ve compiled a few major factors that you’ll want to take into consideration before putting your flat on the market.
It is no secret that the Singapore government keeps a tight reign over property prices. Thanks to timely government measures, HDB prices have always been cushioned from the impact of recessions. In Q3 2020 itself, HDB resale flat prices even went up by 1.5% in spite of unfavourable conditions such as the infamous circuit breaker that put showrooms on halt for over 1.5 months.
The property market’s reopening, coupled with the predicted wave of MOP-fulfilled Punggol flats entering the resale market this year, is expected to place upward pressure on prices.
Healthcare workers and airline staff at the forefront of COVID-19 infections have already started receiving vaccinations in early January 2021. To date, more than 6,200 people have received vaccinations across the four vaccination centres in Singapore. More vaccination centres are expected to be set up throughout the year. It is thus reasonable to expect that the Singapore’s borders will open and increase the number of foreign investors coming into the market.
The 80% of the property buyer’s market is made up of locals. Because Punggol lies far away from the Central Business District (CBD), it has always been reasonable to assume that 80% of prospective Punggol flat buyers will be locals as well. However, Punggol may become an anomaly over the next few years, as foreign investors look to cash in on properties close to the Punggol Digital District. Slated for completion in 2023, the highly anticipated tech hub will be quickly followed by the Punggol Coast MRT in 2024. With exciting developments ahead, prospective investors may be inclined to fork out more cash to secure a property here.
As mentioned earlier, government policies greatly influence property prices in Singapore. In response to the COVID-19 crisis, Singapore’s government rolled out a slew of generous budgets, payouts, and vouchers to keep Singaporeans afloat while also encouraging spending to maintain our economy.
In addition, homeowners were also given breathing space after the Monetary Authority of Singapore allowed for residential property loan repayments to be deferred to 31 Dec 2020.
This means that HDB prices may be artificially inflated at the moment. With financial aid from the government trickling to a stop, an incoming price crash may be on the horizon. Bear in mind that resale transactions take at least 8 weeks to process. Buyers can back out anytime they wish if conditions suddenly take a turn for the worse. So we wouldn’t count on good property prices to hold up just yet.
Compared to much of the world, Singapore’s economy is still holding up. Tech and e-commerce sectors, which were already doing well prior to the pandemic, have only been boosted by the sudden surge of online transactions that accompanied COVID-19.
On the other hand, Singapore’s economy is heavily reliant on traditional industries such as airlines, tourism, and maritime trade. Notably, Singapore’s crown jewel Singapore Airlines has been experiencing what could be its toughest slump in history, having to lay off an unprecedented number of staff members and suspend many others.
This means that COVID-19 might have widened income inequality in Singapore. While employees in tech are likely to have greater purchasing power to afford higher-end homes, the average household may be holding onto their savings as they tide through this extended period of uncertainty. It was reported that Singapore’s economy shrank by 13.2% year on year in Q2 of 2020. Unemployment rate also reached as high as 3.8% in the same quarter. Minister for Trade and Industry, Mr Chan Chun Sing, likened the economic downturn to a loss of growth “generated over the past two to three years”. Therefore, it is safe to assume that it will probably take Singapore the same period to get back on its feet.
With the economy still uncertain, the average buyer will probably not be willing to pay high premiums this year. On the flipside, if you are holding onto a gem of a property, perhaps a tech guru who has benefitted from the pandemic will be willing to pay a handsome sum to take it off your hands.
Overall, we recommend that most Punggol flat homeowners hold onto their property this year. With the effects of COVID-19 still very much present, it is still moderately risky to make property transactions during these uncertain times. With many new developments on the horizon, homeowners can safely expect their property to appreciate over the next few years as well.
However, selling may still be a viable option if your property lies on the pricier end of things. We expect the Punggol district to gain prominence and visibility over the years, and property investors no doubt have their sights set on the northeastern corner of Singapore as well.
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