Singapore property
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How will the economy drive the Singapore property market in 2021?

Right now, the pandemic is the biggest hindrance for the Singapore property market. It is restricting workers from coming to Singapore. In turn, delaying the development of many infrastructures. People are more cautious than ever to come out of their homes. Even a single home viewing has become a major task. To top it all, the economy is suffering badly as businesses are down. The lockdown has effectively dampened both buyers and business sentiment.

Singapore property

On the bright side, things are getting better since the start of 2021. Experts are even foreseeing a bull run in the Singapore property market in 2021. But the key factor also heavily depends upon the vaccination pace. The sooner Singapore achieves herd immunity, the better chance of everything getting back to normal. 

Comparing vaccination rollout to rising Covid cases

Currently, the vaccination process is moving fast but in an uneven manner. If you look at the two graphs below, you can compare the movement of vaccines with the rising Covid cases. Since last December, vaccination rose from 0.17 billion to 1.81 billion. But Covid cases have also increased from 168 million to 413 million. The vaccine rollout needs to exceed the rising Covid cases if SIngapore wants full control over the nation’s economy.

Covid cases vs vaccination

27.6% of the population has obtained a vaccine as of May 28, 2021. But the nation still has a long bumpy road to say we are safe. Mainly because the resurgence of Covid cases are highly unpredictable. It is hard to keep up with the daily changes of infection. 

Unless, the virus is harnessed tight and for good, the economy will be dwindling in its pressure. Followed by its subsequent effect on the SIngapore property market. As people will be in no mood to buy houses when their livelihood is at risk.

Pandemic situation

How is the economy driving the Singapore property market?

With the pandemic taken care of by the vaccines and safety measures, what is the outlook for the Singapore property market? What the numbers say about the Singapore property based on the economy today.

What does the GDP growth say about the Singapore property market?

The GDP has been gradually growing over the years, with highs and lows here and there. The increase in nominal GDP in the first quarter of 2021 is 163.4. Following GDP’s growth, the price index of Singapore property has also increased over the years. As of the first quarter of 2021, it stands at 126.4. Hence, it shows how GDP boosts confidence in the property market. If the GDP of the nation increases so will the price of properties in Singapore. 

Singapore property market
More marriages means more housing needs in Singapore

Marriages are one indication of people settling down. That means a home for the family and a stable business or job for livelihood. As you can see below, the number of marriages has not dampened in the pandemic. Hence, more married couples every year means more customers for the Singapore property market.

Marriage statistics
Affordability vs Singapore property price

One challenge we can see in the property market is this. The affordability of people is declining in comparison to the rising median prices of houses. There is demand, there are plenty of houses but people cannot afford them. The Government is working toward more affordable homes in the form of HDB flats, etc. If this challenge can be managed, then Singapore property will see even more growth.

Singapore property market
Singapore’s assets are growing despite the pandemic

When you want to invest in real estate you need money. With a bad economy and low income, that is almost impossible. However, where the tech giants are offering good prospects to Singaporeans, the economy is also fighting hard to be stable. This reflects on how the assets in the Household and MFI sectors are rising in this situation as well.

Singapore economy

From life insurance, savings to shares and securities, they are following an upward trend. This is a bright spot indicating people are not totally drained out in the pandemic. They have the money to invest in properties. They just need the confidence and more affordable homes to invest in properties.

Singapore economy

What are the positive factors to look forward to in 2021?

The growing GDP and demand for affordable houses are on our side. People also have money in their hands, if not much then at least some. Now, let’s see how some key positive factors are contributing to the economy. That in turn is a bright ray of hope for the Singapore property market.

Outward sectors offsetting domestic slump

Thankfully, the Singapore economy does not rely on only domestic sectors. It has a diversified portfolio of both outward and domestic sectors. And as seen in the last quarter of 2020, the outward sector is doing quite well. It is actually offsetting the slump experienced by the domestic sectors. This in turn shows that though Singapore’s economy is still under recovery, some of its sectors are keeping it from sinking.

Singapore economy
A rise in travellers

Outside visitors took a sharp drop in 2020 for obvious reasons, the pandemic. But now, borders are slowly relaxing. Travellers have already started visiting Singapore again. This is good news for all businesses including both the commercial and residential Singapore property market. Because foreign visitors mean more business for hotels and the tourism sector. Many foreign investors may show interest in buying houses and shophouses. Or harbour their wealth in Singapore family offices to safeguard their money from the volatility of their native country.

Read more on: Is Singapore the perfect family office haven for foreign Ultra net worths?

Singapore economy
Singapore plans to grow the manufacturing sector by 50% over the next 10 years

Covid has shown the world the value of advanced technology and intellectual property. Following this spirit, Singapore plans to grow their manufacturing sector by 50% over the next decade. They want to create more intellectual assets to heighten the quality of their products and services.

Currently, the sector contributes to 21% of Singapore’s gross domestic product (GDP). It hires close to 450,000 workers occupying an average of 12% of the nation’s workforce. The average salary of someone working in this sector is S$4,700. It is 10% higher than the economy-wide median salary. If this sector grows by 50%, imagine how the Singapore economy will rise!

More tech giants scaling up creating employment buzz

Singapore has lately been home to many big tech giants. China’s Tencent, Bytedance, Zoom Video Communications and unicorn Grab and Sea Ltd to name a few. The post pandemic era has become a tech frenzy as everyone needs them to keep connected with the world. 

Hence, these tech giants are scaling up to serve the needs of their customers. This in turn is creating a need for larger talents to work for these companies. Hence, Singapore’s employment is safe from a face fall. Any tech experienced individual has a good chance to be recruited by these tech giants. 

This would in turn return the purchasing power of employees suffering from salary or job cuts due to lockdown. And if they regain their financial stability, this will in turn push them to invest in Singapore property among other needs.

To summarize

2021 is seeing a K shaped, uneven growth in economy. Many things are still uncertain. And will heavily follow how the vaccination and virus process go. Tourism sectors and personal service are also under pressure until the country gains full recovery from the pandemic.

That being said, Singapore is way better than many countries right now. 27.6% of the population has already been vaccinated. And the Government is confident that the majority of the population will complete their first shot of vaccine by August 9, 2021. With virus measures under tight control, a lot of foreigners have again started coming to Singapore.

They are showing interest in buying high-end luxury homes and private residential properties in Singapore. Many sectors such as condominiums, family offices, and shophouse demand are surging.

Singapore is one country that is trusted by foreign investors because it is the safest country when it comes to security and a firm hand in controlling the pandemic. 2021 can be a seriously good year for the Singapore property market with a positive economic outlook. And even better if issues such as price and affordability are addressed.

Read more on: Are HDB Upgraders fueling the private residential market in Singapore?

Also: Why are more and more foreign investors buying shophouses in Singapore?

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