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Impact of Covid-19 on Singapore Real Estate By Taking Reference from Past Epidemics

Updated: Jan 24


As the novel coronavirus or COVID-19 outbreak continues into almost all countries in the whole world, it has become a devastating global crisis. Emerging in late December 2019, it has infected over 540,000 people, with a death toll of over 24,000 as of 26th March 2020 (the number is still climbing up till date). The number of US infections has climbed above 82000 cases, surpassing China being second highest number of cases with ~81000 cases followed by Italy with ~80500 cases. Coronavirus spreads through human-to-human contact, as well as contact with contaminated objects such as lift buttons, switches, door handles etc. This could lead to potential home buyers delaying property viewings out of fear of infection. This also created reluctance among home sellers to open their home for house showing.

So how will this pandemic affect your property in the near future? And what can we learn from past epidemics like the SARS and H1N1 outbreaks? Can we predict from past epidemics so that we can plan ahead?

Is it the downturn for Singapore real estate market?

Overall Market Impact

The most immediate impact is likely to be slower sales volume due to decreased amount of viewings and declining market confidence. Investors may switch to a wait-and-see approach because they are waiting to see the progress and scale of the virus outbreak. The World Bank expects China’s economic growth to decrease by 5.9% this year. Unfortunately Singapore’s economy, which is open in nature and reliant on external economical factors, is not looking too bright too. Singapore’s Ministry of Trade & Industry has downgraded the 2020 economic forecast by 1.0% amid the coronavirus outbreak.

Singapore’s Deputy Prime Minister & Finance Minister, Heng Swee Keat recently claimed that ‘this outbreak will certainly impact our economy' and he had announced two economy stimulus packages in different period to help Singapore to tide over the tough period.

What can we learn from past epidemics like the Sars and H1N1 outbreaks?


Impact of SARS & H1N1 In The Past

During the SARS epidemic (March 2003 to July 2003), Singapore’s GDP fell 7% in the first quarter and recovered subsequently. The overall growth rate was 1.1% for the whole of 2003.

H1N1 epidemic (April 2009 to Feb 2010), there was little impact on the economy, when compared with the global financial crisis (GFC) of 2008.


During the SARS epidemic, HDB resale volume rose 1.4% while average unit selling prices rose 2.4% over the period of the epidemic. With H1N1, HDB resale volume of standard flats also rose by 20.1% as selling prices increased by 9.5%.


There was not obvious impact on the private resale volumes and resale prices during both SARS and H1N1 epidemics. During the SARS epidemic, private resale volumes rose 66.7% and average unit prices for resale rose 4.7%. With the H1N1 epidemic, private resale volumes rose 21.3% and prices rose 23.7%.


Moderate Impact In Housing Market by COVID-19

At present, the COVID-19 epidemic appears to be bigger scale than both SARS and H1N1. What about its impact on the property market? In my honest opinion, I would think the property market will stay resilient but not as good as the situation in SARS and H1N1.

Reason 1: Property market is not one of the sectors that are directly hit by the coronavirus unlike tourism, retail, food and beverage, and MICE (meetings, incentives, conferences and exhibitions). It is not clear how the pandemic will pan out eventually and if it will be contained successfully one day, I believe that the effect from COVID-19 epidemic could be temporary, and may not have devastating impact on the overall property market.


Reason 2: Singapore has proven time and again that she can remain resilient amid crises, after having emerged strongly from SARS and H1N1. Given the concerted effort by Singapore government in digging into the national reserves and dedicating about 11% of its GDP (one of the largest relief packages) to support businesses, workers and families, we should expect the Singapore economy still can work as per normal. Needy property buyers and sellers still can buy and sell houses without being affected too much financially.


🤔 “Property Price will drop due to Covid 19, better to wait & see…”

Some clients asked me the above question, so here is my opinion. This crisis had affected the property market to a certain extent, however I believe that property price will still hold up well in all segments (either new sales home or resale home).

1. Developers’ Cost: The property primary market price is supported by developers. Unlike the stock market, it is only driven by fear & greed, most developers do not need to drop price to sell as they have holding power. Most of the mega projects have achieved 40-80% sold status. Despite of the epidemic situation, many projects are still selling well and many units are flying off the shelves.


2. Increasing Land Cost: Upcoming new launches will be sold at a higher premium due to the high land bidding price and enbloc price. The current projects in the market are reasonably priced with just lean profit margin. There is not much room for most developers to drop prices further. Of course, developers will still launch some discounts to move some lower floor units with not so good facing or some promotions in line with festive seasons.

3. Confidence in Singapore: Government’s swift and transparent approach to tackle the issues has impressed the world. Global media has put Singapore in spot light for being efficient and effective in its governance. Singapore won high praise for the way crisis being handled. This has instilled great confidence of investors towards Singapore. In Q1 2020 alone there are 841 transactions in Singapore's Centre Core Region. Foreigners account for 28% of the transactions.


🤔 "I am afraid that I may lose my job and not be able to service the loan…”

No doubt all of us have to exercise financial prudence all the time, not just during times of crisis. I always advocate clients do not over leverage and do not overstretch in the budget.

1. Have Enough Reserves: Most have healthy CPF and cash reserve. You may allocate a sum that is sufficient to service the mortgage loans for 6 months in the event there is job unemployment.

2. Tight Loan Framework: Property loan is granted based on income, age and credit record. Financial capacity will be carefully assessed by the bank's risk management team before granting any loan amount. TDSR and LTV framework under MAS rules will ensure that no one is over leveraged.


3. Low Interest Environment: When government is on expansionary fiscal policy, bank interest rate is likely to remain attractive and low. Compared to a bullish market when home owners have to fork out more from pocket, it is good time to save some interest with the current attractive bank loan packages.


All in all, I will be expecting moderation to the transaction volume in the short term, but no immediate negative impact on prices. Depending on how the coronavirus situation evolve over time, the prediction may also change according to the market sentiment. Potentially after the outbreak, we shall see an immediate spike in price and surge in the purchase volume given how Singapore being positively portrayed by international media in handling crisis.



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