I recently published an article entitled “5 Reasons Why Singapore’s Property Market Is Heading For A Bull Run” to send out an property market alert to the financial community of a buoyant real estate market. Not surprisingly, majority of the social media commenters responded with disbelief and criticism. I understand the skepticism: How could we have a property bull run when we are in the midst of the worst economic crisis every faced by Singapore since independence?

Interestingly, two days ago, the Straits Times released another article entitled “Condo resales hit 2-year high while prices rise 0.8%: SRX”. The resale condominium prices rose by 0.8 per cent in Oct-2020. On the HDB front, another article was released: “HDB resale prices rise for 4th month in October; 13 million-dollar flats sold: SRX”. Moreover, there was a record breaking 13 HDB resale flats were sold for more than $1 million each.

I stand by my macro-economics outlook: Unless the government intervenes in the property market, Singapore, like UK and US, is going to experience a bull run in the property market.

For the majority of the house owners, apart from taking some comfort that the paper value of your residential houses are increasing in value, there probably ain't much you can do to extract value out of this bull-run. Chasing bull markets are dangerous whether in property or stock markets. There could be some upside potential in property counters but I believe that the stock market has already priced it in. For property investors with multiple properties, I would be watching the market closely to look out for a good selling opportunity. I am in the strong opinion that the Singapore Government is currently sharpening its policy needle, to burst any property bubbles as soon as they emerge, as seen from the past.

For those readers who are still not convinced of the property bull run, I have a video here to explain to you, courtesy of my financial blogger wannabe daughter, Kate.

I have also summarized the 5 points of why is there a property bull run below.

A. Serious BTO Construction Delay Resulted In A Demand Swing Towards HDB Resale Flats

The COVID-19 pandemic has caused the construction industry to be stalled for a few months during the circuit breaker period in April earlier this year.

COVID-19 infected many of the construction workers in Singapore as the pandemic rages uncontrollably in the foreign workers’ dormitories, resulting in a standstill in the construction industry. Even after the circuit breaker was lifted in Singapore and the economy restarted, the construction sector’s productivity remains crippled due to strict social distancing rules imposed on the workers.

This caused significant delays in BTO waiting time of up to 9 months for existing successful applications. BTO flats waiting time are now a long wait of up to 62 months. It is no wonder that many newlywed couples have decided to switch to buying a resale HDB flat – rather than to be forced to wait up to 5 years. Demand for HDB resale flats shot up, and it is not uncommon now for buyers to offer cash over valuation (COV) of S$20,000 -S$30,000 for HDB resale flats. HDB resale transaction volume also reached the highest in 10 years.

There is a ripple effect upstream. Many sellers of these HDB resale flats would, in turn, enter the private property market to buy a condominium or a landed house, in droves. This would then push up the private property market prices.

B. Many Professionals Now Find Their Home Too Small Because Of WFH

The COVID-19 crisis has resulted in many of us working from home (WFH) since the circuit breaker in April 2020. Soon after, many of us started realizing that our homes were not conducive to work in. WFH productivity is lower as we are plagued by the noise from children, the kitchen, and other family activities.

As it becomes clear that the WFH arrangement will likely last for a long time, many decided to buy bigger houses to accommodate both a family and a working environment. On the ground, real estate agents are reporting many landed properties and large houses being snapped up like hotcakes.

C. Low-Interest Rate And Government Providing Mortgage Deferment

Central Banks across the world have lowered their interest rates to near zero. As a result, housing mortgage rates in Singapore are now very low, at near 1%, making housing purchases more affordable.

The Monetary Authority of Singapore (MAS) has also extended mortgage deferment measures to help Singaporeans with their mortgage payments; thus the default risk of mortgage payment is very low (for now at least).

Anyone economically impacted by Covid-19 could defer his/her monthly mortgage for property loans significantly up to Dec 31, 2021. As a result, housing purchases is now cheaper with a lower interest rate and a much lowered risk of default for a foreseeable future, thus fuelling the demand for property.

D. Despite The Pandemic, There Are Winners In Our Economy

Despite the COVID-19 economic recession and a heightened closure of businesses and an escalating unemployment rate, certain sectors have remained unaffected or have even thrived during this crisis. While travel, hospitality and physical retail sectors are hit hard by the pandemic, other sectors such as finance, e-commerce, healthcare, and supermarkets have benefited from the new mode of life in the pandemic. Moreover, investors, heavy into US equities, have profited handsomely from the recent bull-run.

Upon profiting from this pandemic, what do you think the Singapore based winners from the pandemic would do with their money? They would likely invest in the most popular investment asset in Singapore – property.

E. All Other Investment Asset Classes Are Comparatively Unattractive Now

Gold prices are at a 30-year high now. US equities and bonds have also reached record highs. Singapore stock market is officially Asia’s worst-performing stock market in 2020. Cash deposits in the bank are yielding near-zero returns. The Federal Reserve and other countries’ central banks have been pursuing aggressive quantitative easing measures and this would likely lead to asset inflation especially for property.

No assets other than properties are attractive, which partly explains the buoyant property market now. The property price hike is now visible not only in Singapore but across the US and UK. US housing appreciated 5.9% in August 2020 while UK housing prices rose 5% in September 2020 year on year.

Loo Cheng Chuan, is the Founder of the 1M65 Movement. He developed the 1M65 ($1 Million By 65 Years Old) CPF investment strategy that is helping many Singaporean couples to become millionaires at retirement. He was one of the few non-civil servants to be awarded the Public Sector Transformation award in 2018 for his 1M65 efforts. He runs a 1M65 Discussion Group (Newly launched with a Real Estate Discussion) where he regularly coaches passionate 1M65 enthusiasts on good personal finance virtues. Loo and Kate (his very comical daughter) launch an entertaining 1M65 Youtube video on the property bull run to add more life to this topic.