• Maine Soh

Property Market Outlook:How Singapore’s Private Residential Market Performs Amid Recession

Updated: Jun 15, 2020



I am looking forward to the end of the Circuit Breaker prior to the announcement on 19 May 2020.


While I hope that life could get back to normal after 2 June 2020, I am glad that Singapore has been very prudent to embark on a three-phased approach to avoid rise of Covid 19 cases and experience second wave after reopening.


Since real estate salespersons cannot commence our work in full force, I would like to take this opportunity to address one of the most common questions I get from readers after reading my article about Turning Covid 19 crisis into Opportunity.


The question is none other than “how Singapore property market is performing amid the unprecedented recession”


With all honesty, since current covid-19 is an unprecedented event, it been been impossible for economist to analyse or measure the impact of the current Covid -19 situation.


Coronavirus Recession

Lee Hsien Loong

You may watch this 22min video here if you have missed PM Lee broadcast on 7 June 2020.

This pandemic has been describe as “Great Lock-down” for the reason that more than a third of the world’s population has been placed on quarantine or lock-down to combat against the spread of the virus.


The impact of the disruption to economic activities in major economies worldwide has been more server than expected.


Likewise, Singapore’s property market recovery has to come to an abrupt halt amid the pandemic as well as macroeconomic uncertainties.


Why Singapore Remains Resilient?

Prior to the pandemic, according to the World Economic Forum Global Competitiveness Report, Singapore has been ranked the world’s most competitive economy.

The main contributing factor include our open economy, strong intellectual property protection, goof diversity of workforce, strong labor employer relation as well as having government stability and its responsiveness to change.

Those have been evident when Government intervened decisively by implementing our four successive Budget of 92.9 billion dollars to the economy, which is equivalent to 20% of our GDP.


Such measure has been the largest intervention in our history. Contrasting to many other countries, Singapore can simply draw from our reserves.


Impact on Singapore’s Property Market

Inevitably, in accordance to the data from Urban Redevelopment Authority (URA) the overall price index of private properties has drop 1% quarter – on quarter in the first quarter of 2020.


Nevertheless, economist would consider such decline as not as server compared to past crises.


It has been recorded that there is a decline of 1.9% in 1996 during the start of the Asian financial crisis as well as a decline of 2.4% during the start of the global financial crisis.


Will the Price Drop Drastically?


Yes and No.


The price may decline further should the duration of the pandemic persist for a longer period of time. This is mainly due to the increase of unemployment rate.


Our Deputy Prime Minister Heng Swee Keat mentioned that the number of unemployed residents in Singapore may increase above 100,000.


This figure shall be more than Singapore’s highest annual average number of 91,000 unemployed residents that was registered during the 2003 SARS epidemic. Click here to read more:


Here are the 2 reasons why there may not be a further decline


Firstly, our several past cooling measures over the years such as TDSR (Total Debts Services Ratio) and Mortgage Servicing Ratio (MSR) have ensure property owner continue to have holding power to tight through the crisis.


Those measures have instilled financial prudence in property owner by limiting the gross monthly income usage to service their housing loans.


Secondly, Singapore government has introduced series of policies and legislation that specifically interceded to forestall the plunge in property prices.

The following are policies:


i) Monetary Authority of Singapore (MAS) has implemented relief measure by collaborating with the financial industry to all home owner with existing mortgage loan to defer repayment of the principal or both principal and interest up to 31 December 2020.


ii) Singapore Ministry of Law (MinLaw) has put in place legal provision of 6 months relief commence from 20 April 2020 to protect property buyer from forfeiture of deposit or being charge additional fee.


iii) Inland Revenue Authority of Singapore (IRAS) has announced the provision of an 6months extension of ABSD spouse remission sale timeline for Singaporean married couple.


iv) Job support scheme Workfare Special Payment, Self-Employed Person Income Relief Scheme (SIRS) and the SGUnited Jobs and Skill Package aims to encourage firm to retain local workers as well as to provide income support for Singaporean and their families.

I believe, if deemed necessary, Singapore government will continue to come up with further interventions to cushion the decline of property prices during the deep recession


Buyer Are Still Entering the Market


Despite the uncertainty, buyers continue to have confident in Singapore property market.


With all the discount provided by developer and our interest rate at all-time low, many aspire home owner who dream to stay in the core central region (CCR) can now be realized.

According to Christine Sun, Head of Research & Consultancy at Orangetee & Tie, the number of non-landed transaction increased from 951 units in the fourth quarter of 2019 to 1032 units in the first quarter of 2020

According to URA data, the sales volume for new launches has also increased from 277 in April2020 to 511 in May 2020.


This has showed an increase of 234 transactions (84%) which also concluded a total of 788 units of transaction during the Circuit Breaker period.



Even though real estate sales activities is considered as a non-essential services, it has not stop buyer from taking action in owning their dream home or an investment property.


In Conclusion

I believe everyone is hopeful to resume our lifestyle normally soon.

As the cases of Covid-19 seem to have decline in the general population over the world, I definitely hope more economic activities could resume normally and bring about the increase in property transaction activities. .

Real estate market in Singapore has sign of rebound despite the restriction of circuit breaker. Once the measures are completely eased, the buying activities may rebound given the pent-up demand.

The main demand is deriving HDB upgrader from the large number of MOP flats since 2019. Most of the upgraders are seize the opportunities to cash out their HDB to enter into private property which potentially offer them greater capital growth in the next cycle

Moreover, as soon as the travel restrictions are lifted, some foreign buyer may also return.

Given the fact as warned by our Deputy Prime Minister Heng Swee Keat that it may take up to 18 months for a Covid-19 vaccine to be materialise, many economist has mentioned that the chance for a V-shaped recovery is low.

Nevertheless, Singapore has proven the capability to steer the economy skilfully out of any economic downturn. As such, Singaporean and global investors continue to hold trust in Singapore property market.

I hope this report has provided you greater property insights into your investment positions.

 

Do you need more clarification

I do provide a Free consultation for individual who wishes to make changes to their property portfolio but not sure how to go about it.

Click Whatapp to get in contact with me for a 1 time free 30min Property Wealth Planning (PWP) consultation.

A PWP consultation includes the following:

· A detailed financial affordability assessment

· A clear and customized investment road map for your real estate investment journey.

 

About Author


Maine Soh has been in Singapore Real Estate Consultant and Property Wealth Planner since 2009 when she is still studying in NUS.

Upon graduation from NUS, she became very attached to this industry especially she has not only built a pool of clientele portfolio, she has also built a pool of friends whom she felt a sense of responsibility to take care of their leases or sales of their properties.


To date, her greatest fulfillment is still the capability of assisting her clients and friends to source the right property that they call home and achieving the best offer that bring smiles on their faces. She valued all the relationship that came into her life. Thus, it is common for her to go extra mile for her client whenever required.

Most of her clients trusted her as she is not only well versed with all the marketing strategy and tools, she hold them through the complex process of the transaction ensuring they make informed decision and prevented them from making avoidable mistake. Thus, her success is evident from consistent referrals from my clients and friends.

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