Singaporean home-buyers snub central region in favor of affordability
Areas such as Raffles Place, Cecil, and Marina saw a 12% drop in prices in Feb-July.
Real estate prices in neighborhoods at Singapore’s outer regions edged up whilst those in the central region dropped between February and July, indicating that there is an increased demand for properties outside the city centre since COVID-19 begun, according to a study by financial services provider ValueChampion.
Real estate prices in the central region dropped 13.7% between February to June, compared to the overall market’s 7% price decline. In contrast, real estate prices outside the central region climbed 5.05% during the same period.
Typically popular areas like Postal District 1, which includes Raffles Place, Cecil and Marina saw a 12% drop in price per square foot (sqft) at the height of the circuit breaker measures in April.
Neighborhoods like Harbourfront, Telok Blangah and Pasir Panjang also saw PSF declines of 7-8% between February and April, indicating COVID-19's effect on preferences for space and affordability.
People may be moving away from these areas in search of housing in less dense and cheaper places, according to ValueChampion.
“Properties in the heart of downtown are typically coveted due to their proximity to work and attractions. However, consumers may no longer value this proximity due to COVID-19 and social distancing measures that have been put in place,” the study noted.
In contrast, real estate prices in neighborhoods in the outer regions of Singapore grew by 5.05%, indicating that during COVID-19 increased demand for properties outside of the city centre.
Neighbourhoods that are most distant from the central region like Upper Thomson, Springleaf, Novena and Thomson all saw real estate prices jumped up to 17.51%.
Even heavily populated areas in the outer regions also saw price increases, with District 22 (which includes the heavily populated Jurong) seeing a 17.51% price per sqft increase between February and July.
This suggests that whilst population density may have played a role in homeowner decisions during COVID-19, the overall consumer preference may have been to move out of the central area, the study said.
“Making the move to the outer districts may increase commuting times and reduce access to social activities. However, with Covid-19 limitations, options like telecommuting and virtual get-togethers have become much more commonplace and Singaporeans may decide to swap the central region's commute, nightlife and prestige for more space, less crowds and cheaper apartments in more distant neighborhoods,” it added.
Cities like Hong Kong, New York, and Seoul experienced similar shifts in demand during the pandemic, suggesting that increased demand for real estate outside the city centre is a global phenomenon.
Hong Kong’s real estate market has seen a substantial 29% decline during COVID-19 since its peak in October 2019. Whilst prices decreased in both downtown and a few outer regions of Hong Kong, the more substantial drops were concentrated in its downtown districts.
However, not all of Hong Kong’s real estate has seen a decrease in price. Although areas such as Hong Kong Island, Kowloon, and Tsuen Wan have had a considerable drop in pricing–58.77%, 37.91%, and 21.35% respectively–other areas like Sai Kung, Yuen Long, and Tuen Mun have seen real estate prices soar by 19.91% up to 54.16%.
Meanwhile, New York City experienced more similar real estate trends with outer boroughs like Brooklyn, Queens, and Westchester averaging a 4% YoY increase in real estate prices when compared to Q2 2019.
On the other hand, Manhattan has seen a significant 10.20% decline in pricing. Notably, Westchester, which is located the furthest distance out of these listed locations, saw the largest price increase of 6.90%.