5 tips for homeowners for the 2021 housing market

Over the past year, the average public housing market price has increased by 4.8%, an increase from the 0.1% increase in 2019. Even with the pandemic limiting activity in a number of industries, house prices in Q4 2020 saw the biggest quarterly increase of this decade. The housing market is not going anywhere and we have some useful tips and information for anyone looking to buy or sell a property.

Know your market

In 2020, the housing market started with a slight decline in the first quarter, but grew 2.2% in 2020 thereafter. Earlier in the year, the country experienced lower prices in central urban areas; however, there has been a rise in the outer areas where house prices have risen by 5.1% between February and July. In the fourth quarter of 2020, residential real estate prices rose 2.1%. Again, although house prices rose in Q4 2020, core prices fell 11.8% from Q3 to Q4 2020.

It is imperative that you research the housing markets of the specific neighborhoods where you are looking to buy or sell. We urge buyers and sellers to be on the lookout for price trends for their specific neighborhoods. A start would be to look at the current prices and compare them to the prices of the past year. Other factors that will be discussed in the following sections, such as interest rates and government initiatives, also play a role in “knowing your market”. There are several sources you can use like PropertyGuru, 99.co, and SRX Property to help you find the right properties for you.

Keep up to date with BTO sales and launch announcements

Besides just finding resale properties, it can also help track new make-to-order sales and project launches by the Housing & Development Board (HDB). There have already been some sales and project launches in 2021 and there is more to come. The HDB has announced that in May 2021, HDB will offer approximately 3800 BTO apartments in Bukit Merah, Geylang, Tengah and Woodlands. Additionally, in August 2021, HDB will offer around 4,900 BTO apartments in Hougang, Jurong East, Kallang Whampoa, Queenstown and Tampines. For those of you interested in newer homes, BTO apartments may be the more attractive option. The best resource for announcements on this is HDB and you should keep an eye out for best mortgage rates for BTO apartments to make sure you get a mortgage that meets your needs and financial requirements.

Keep an eye on the US Federal Reserve

Interest rates are a major factor in the fluctuation of property prices. Interest rates and house prices are inversely correlated. Basically, as interest rates go up, real estate prices tend to go down as demand from home buyers declines. These impact both current owners and potential owners, as many mortgage loan and mortgage refinancing rates follow market interest rates.

Past data shows us that the SIBOR and SOR tend to follow interest rates in the United States closely. For this reason, we recommend that you keep an eye out for trends and announcements regarding US interest rates for current and future homeowners.

Historical trend of SOR 1999-2020

Chart updated to December 1, 2020

To track and calculate your mortgage rates and estimated monthly mortgage payments, see our home loan tool. The tool allows you to compare the best available rates in the country based on your personal preferences.

Stay on top of changes in government policy

We had the pleasure of talking to Sax Global Macro Strategist based in Singapore, Kay van-petersen to better understand the market and for buyers and owners. When monitoring the housing market, Kay Van-Peterson reiterated the importance of monitoring government policies and initiatives. “Government policy remains the most important factor in housing prices, which they undoubtedly monitor closely.” We recommend that owners keep an eye out for policies and initiatives that could be put in place to avoid any surprises. For example, an unexpected change in government fees on new developments could be passed on to consumers in the form of higher house prices or property taxes.

Home improvement loans rather than personal loans

In Singapore, individuals are allowed to use a renovation loan to finance their renovations. This loan option is ideal for anyone looking to upgrade a home before moving in or selling it for a better price. Lots of people tend to opt for a personal loan; however, annual interest rates on personal loans can be up to 2% higher than home improvement loans. Accordingly, we recommend this route. In addition, you may receive a banking promotion where your loan will be interest free for a few months. If you need more financing, you can have a personal loan to supplement your home improvement loan.

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