Renovation Loans

5 Tips for Homeowners for the 2021 Housing Market

If you are interested in buying or selling a home there are trends and factors that you should be aware of. Read to find out some key factors in 2021.

Over the past year, the average price for the public housing market increased 4.8%, an increase from the 0.1% rise experienced in 2019. Even with the pandemic restricting activity across a number of industries, the housing prices in Q4 2020 experienced the highest quarterly rise of this decade. The housing market is not going anywhere and we have some helpful tips and insight for anyone looking to buy or sell a property.

Know Your Market

In 2020, the housing market started with a slight dip in Q1, but rose by 2.2% during 2020 following. Earlier in the year, the country experienced a decline in prices in the central urban locations; however, there was an uptick in the outer areas where the real estate prices increased by 5.1% between February and July. During Q4 of 2020, residential property prices rose 2.1%. Again, although property prices rose in Q4 2020, central prices have decreased by 11.8% from Q3 to Q4 2020.

Graph showing Resale Price of 4-Bedroom Flats in Q4 2020 by Neighborhood

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 current prices and compare to prices over the past year. Other factors that will be discussed in the following sections like interest rates and government initiatives also play a role in "knowing your market." There are multiple sources that you can use like PropertyGuru, and SRX Property to help you find the right properties for you.

Keep Up with BTO Sales and Launch Announcements

Other than just looking to resale properties, it can also help to keep track of new Buy-to-Order sales and project launches by the Housing & Development Board (HDB). There have already been a few sales and project launches in 2021 and there is more to come. The HDB has announced that in May 2021, HDB will offer about 3,800 BTO flats in Bukit Merah, Geylang, Tengah and Woodlands. On top of that, in August 2021, HDB will offer about 4,900 BTO flats in Hougang, Jurong East, Kallang Whampoa, Queenstown and Tampines. For those of you interested in newer homes, BTO flats may be the more attractive option. The best resource for announcements on these is HDB and you should keep an eye on the best home loan rates for BTO flats to ensure you get a mortgage that fits your needs and financial requirements.

Keep an Eye on the United States Federal Reserve

A major factor for fluctuating real estate prices is interest rates. Interest rates and home prices are inversely correlated. Basically, as interest rates increase, real estate prices tend to decrease as demand from homebuyers decreases. These impact both current homeowners as well as prospective homeowners, as many home loan and home loan refinancing rates follow market interest rates.

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

SOR Historical Trend 1999-2020
Chart Updated as of 1 Dec 2020

As a way to monitor and calculate your home loan rates and estimated monthly payments on your mortgage, check out our home loan tool. The tool allows you to compare the best rates available in the country based on your personal preferences.

Stay Up to Date on Government Policy Changes

We have had the pleasure of speaking to Saxo's Singapore-based Global Macro Strategist, Kay Van-Petersen to gain more insight on the market and insight for homebuyers and homeowners. When tracking the housing market, Kay Van-Peterson reiterated the significance of monitoring policy and government initiatives. "Government policy remains the biggest factor for housing prices, which they are no doubt monitoring closely." We recommend that homeowners keep tabs on what the policies and initiatives may be taking place to avoid any and all surprises. For instance, an unexpected change in the government's fees on new development could get passed on to consumers in the form of higher home prices or higher property taxes.

Renovation Loans Over Personal Loans

In Singapore, individuals are allowed to use a renovation loan to finance their home improvements. This loan option is great for anyone looking to improve a home before either moving in or selling it for a better price. Many people tend to go for a personal loan; however, the annual interest rates on personal loans can be up to 2% higher than renovation loans. As a result we would recommend this route. Furthermore, you may receive a bank promotion where your loan will be interest free for a couple of months. If you need more funding, then you can have a personal loan to supplement your renovation loan.

Sahmi Chowdhury

Sahmi is a finance graduate from Northeastern University. He has had experience in the financial services sector working at Brown Brothers Harriman in trade settlement and True Capital Management as an investment analyst prior to joining ValueChampion.