Singapore Starts To Swings

Generous stimulus has saved the Lion City’s economy from disaster, and a percolating post-pandemic boom looks set to send the residential sector into overdrive

- Al Gerard De La Cruz

Confidence in a broad-based economic recovery this year is becoming infectious. Spurred on by the global inoculation drive and fiscal stimuli, atrophying property markets worldwide have been energised by the prospect of a return to normalcy.

In Singapore, an explosion of pent-up demand has sent residential values to pre-pandemic rates. In the first quarter of 2021, prices of private homes in the city-state soared by 3.3%, the steepest quarterly rise since 2018, data from the Urban Redevelopment Authority (URA) shows. Singapore residents have raised their station during the pandemic. Excluding foreign domestic workers, the first quarter of 2021 saw employment figures arrest four consecutive quarters of decline. Last year, the country staved off doom by releasing S$100bn ($74bn) in stimulus, equivalent to 20% of its GDP.

“In a way, the economic stimulus package preserved the income-generating capabilities of most households despite the recession in 2020,” says Leonard Tay, head of research at Knight Frank Singapore.

After a historic contraction in 2020, Southeast Asia’s only developed economy will likely grow by 4% to 6% this year. “If it continues, then it’s quite likely that you will see people being more comfortable to buy bigger homes or commit to a purchase,” says Christine Sun, senior vice president of research firm OrangeTee & Tie.

Adding fuel to fire, credit will likely remain easy in the foreseeable future. The Federal Reserve, which influences the Singapore Interbank Offered Rate (SIBOR), has vowed to keep interest rates near zero until 2023.