The coronavirus pandemic has caused a dent in China’s $43 trillion property market as developer sales offices are closed and potential homebuyers are on lockdown.
The question is: will the coronavirus outbreak affect the Singapore property market the same way?
A quick search for coronavirus updates and you’ll see multiple news reports of Singapore being one of the nations with the highest number of confirmed virus cases outside of China. As of 7 Feb, the number of new coronavirus cases has reached over 31,000 globally in merely two months: a far bigger number than the SARS epidemic in 2003 that lasted eight months.
With the growing number of local transmissions, tourism has also taken a hit. While none of these can accurately project the outlook of the 2020 property market in Singapore (after all, more HDB flats changed hands in January than in December 2019), we simply can’t shake the looming possibility that this event may create quite a stir in the marketplace.
Whether you’re a homebuyer or seller hoping to transact a property at this time, or perhaps an investor evaluating a Singaporean property, here are a few key points that may impact your next move.
Stay mindful and resist knee-jerk reactions that will push you to make ill-informed decisions. There’s no evidence that the property market will take a hit during this time.
In many ways, Singapore has been better equipped to handle such outbreaks since the SARS epidemic. In the near term, industries that will be harder hit are the hospitality, tourism, retail and F&B sectors.
Besides, the property market projections for 2020 have been relatively conservative due to existing cooling measures, higher interest rates, and the glut of properties in the pipeline. The Enhanced CPF Grant that was effected in September 2019 has also given a boost to the previously-lagging resale market.
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For the past year, the HDB resale market has been trending upwards steadily. In January 2020, there was a healthy increase of 0.4 percent in the price index and a 23.1% increase in total units sold compared with January last year.
All this information supports a strong and steady marketplace for homebuyers on the lookout for a new nest. While some may hold back on showroom visits and home viewings due to the fear of contracting the virus, home purchasing activities should still proceed as normal, as long as there is proper consideration for hygiene.
Instead of the coronavirus, the key challenge for homeowners selling their properties during this period may be the excess supply of homes in 2020.
A projected 5,902 HDB flats will join the resale market once they reach their Minimum Occupation Period (MOP) in the next three months. 6,700 Build-to-Order (BTO) flats will also be launched in February and May to add to the supply of new homes.
In addition, the 35,538 unsold private residential units that were left over from 2019 will be joined by another 5,265 units to be completed by the end of 2020.
In short, buyers are spoilt for choice and you’ll need to ramp up your marketing game to stand out.
At the more micro level, be ready for a slowdown of home viewings as many are still coping with the evolving coronavirus situation. That doesn’t mean you have to lower your asking price though; the property price index is relatively stable and unlikely to see a freefall anytime soon.
Be patient and find alternative methods to speed up the selling process. Unless you have the holding power, working with a proptech company or engaging a more resourceful agent could be effective ways to reach a larger pool of potential buyers.
Is it a good time to invest in properties in Singapore? It all depends on your appetite and holding power.
Unlike homebuyers or homeowners who are buying and reselling properties for residential purposes, property investors are investing for rental gains or speculative returns from private and commercial properties. As such, it’s important to explore the macroeconomic impact of such an outbreak on the property scene.
However, it may not be appropriate to compare the current outbreak with the 2003 SARS epidemic.
Back then, the Singapore economy was already suffering from the severe blows of the dotcom bubbles, U.S. recession, and the Iraq War even before SARS hit the country. In its weakened state, the Singapore economy was even more susceptible to the sudden SARS outbreak.
This is not the case right now. While we likely won’t see returns matching those of 2019, the macro risks and fears of a global recession have largely abated. That means there’s no need to hold back if you already have a good deal going.
However, if there’s no urgency for the investment, taking a wait-and-see approach may not be a bad choice. Should there be a downturn due to the coronavirus outbreak, there’s a chance that the government will loosen property cooling measures (just like in 2003) to revive the economy, which in turn can benefit property investors.
Just note that investing in a property market that is spiralling downwards will require patience because recovery can take time. If you have the holding power and aren’t in a hurry to transact, then this crisis may present you with an opportunity for future profit.
There’s no need to speculate or spiral into doom and gloom during this outbreak. Singapore is better equipped than before and rest assured that the lessons learned from SARS will empower the nation to move through this period more efficiently.
Don’t let the rumour mill push you into making ill-informed decisions or derail you from your initial plans. Studying the market pricing and conditions before committing to any property transactions may just be the best bet right now.
Priscilla has been managing properties in Singapore for the past 15 years. With her cache of firsthand experience and market research, she hopes to share valuable information with property sellers and landlords to help them make informed decisions.