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Impact of epidemic outbreaks on the Singapore property market | How will it affect your private property?

OrangeTee & Tie
·5-min read

With the growing numbers of COVID-19 infections daily, both in Singapore and globally, Singapore property buyers, sellers, landlords and tenants are equally concerned about the impact of the current situation on their potential property transactions.

Here’s what you need to know, based on what we have learned from past epidemics like Sars and H1N1, according to OrangeTee & Tie Research & Consultancy.

 

Impact of past epidemics on the Singapore economy

 

Effects of past epidemics on Singapore


Source: Various media reports, OrangeTee & Tie Research & Consultancy

 

The table above provides a summary of the impact seen from past and present epidemics on the Singapore and Global economy.

During the Sars epidemic – which lasted from March 2003 to July 2003 – Singapore’s GDP dropped 7% in the first quarter and recovered subsequently. The overall growth rate was 1.1% for the whole of 2003.

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

 

Impact of the current COVID-19 epidemic on the Singapore economy

 

At present, the COVID-19 epidemic continues to evolve, so it may be too early to pinpoint its full impact on Singapore. However, it appears to have a smaller impact than both Sars and H1N1 on the private residential market, according to Christine Sun, head of research and consultancy at OrangeTee & Tie.

“Currently there is no major impact on the property market as it is not one of the sectors that are directly affected by the coronavirus unlike tourism, retail, food and beverage, and Mice (meetings, incentives, conferences and exhibitions)”, said Sun.

 

Impact of epidemics and financial crises on the Singapore private property market

 

Here’s what we know about the impact of past epidemics on the Singapore private property market.

Effect of Sars, H1N1 and GFC on private residential property sales prices and volume


Source: URA, OrangeTee & Tie Research & Consultancy

 

Historically, financial crises have had a greater impact on selling prices & sales volumes in the private property market than viral epidemics.

In the aftermath of the GFC – which lasted from April 2007 to March 2009 – sales volumes fell 51.1% to 1,865 units, while average unit prices fell by 17.3% to $783psf.

On the other hand, after the Sars outbreak, sales volumes rose 264.1% to 1,682 units and average unit prices rose marginally to $543psf.

A similar trend was observed after the H1N1 outbreak, where sales volumes rose 32.9% to 2,809 units, and average unit prices rose 48.0% to $1,165psf.

 

Breakdown of the impact of Sars and H1N1 on various submarkets

 

Private new home sales


Source: URA, OrangeTee & Tie Research & Consultancy

 


Source: URA, OrangeTee & Tie Research & Consultancy

 

According to OrangeTee & Tie Research & Consultancy, there was a marginal knee jerk reaction for both Sars and H1N1 epidemics.

For Sars, private new home sales volumes rose by 531.9% though average unit prices of new sales fell by 8.7%. With the H1N1 epidemic, private new home sales volumes fell 13.3% and prices rose by 45.9%.

 

Private resale market for Condos


Source: URA, OrangeTee & Tie Research & Consultancy

 


Source: URA, OrangeTee & Tie Research & Consultancy

 

There was no impact on resale volumes and resale prices during both Sars and H1N1.

During the Sars epidemic, resale volumes rose 66.7% and average unit prices for resale rose 4.7%. With the H1N1 epidemic, resale volumes rose 21.3% and prices rose 23.7%.

 

Private rental market for Condos


Source: URA, OrangeTee & Tie Research & Consultancy

 


Source: URA, OrangeTee & Tie Research & Consultancy

 

For Sars, rental volume rose 24.2% but rental prices fell 2.9%. With H1N1, rental volume fell 8.5% though rental prices rose 3.2%.

 

How did the epidemics affect property demand from foreigners?

 

Private home sales volume by residential status


Source: URA, OrangeTee & Tie Research & Consultancy

 

Incidentally, there was little impact on demand from foreigners and Singapore permanent residents (PR).

During Sars, sales volume rose by 164.6% for PRs and 91.6% for foreigners. Sales volumes from Singaporeans also rose correspondingly by 235.8%.

For H1N1, sales volume rose once again for PRs and foreigners, by 16.8% and 49.8% respectively. Singaporean purchases fell 11.6% partly due to the effects from the GFC.

 

Private home sales volume by nationality


Source: URA, OrangeTee & Tie Research & Consultancy

 

OrangeTee & Tie Research & Consultancy also noted a surge in purchases by foreign buyers after each epidemic.

With Sars, sales volume rose for all nationalities, and increased the most for Chinese buyers (250% or from 14 units to 49 units).

Likewise for H1N1, sales volume rose for all nationalities, and increased the most for Chinese buyers (57.1% increase, or from 273 units to 429 units).

 

January new home sales takes COVID-19 in its stride

For the month of January, at least, it appears to be business as usual for the Singapore’s private property market. Developers have continued to launch projects, and new sales have been resilient.

In fact, January 2020 new home sales reached a record 618 homes, the best performing sales figure for January in the past seven years. The healthy sales figures were boosted by the affordable pricing of existing projects, as well as the launch of new projects. The latter included three luxury projects – Leedon Green, The Avenir, and Van Holland – where a total of 74 units were sold.

 

COVID-19: A temporary effect

“Although it is not immediately clear how the epidemic will pan out, any impact could be temporary and may not cause a long-term adverse impact on the property market here,” said Sun, adding that Singapore has proven itself to be resilient amid crises such as the last Severe Acute Respiratory Syndrome (Sars) outbreak.

2020 Market Projections for Private Residential market


Source: URA, OrangeTee & Tie Research & Consultancy

 

To that end, OrangeTee & Tie Research & Consultancy maintains its 2020 private residential market projections, and expects new home sales to remain resilient around 9,000 to 10,000 units for the whole of this year while rental volume could hit 91,000 to 94,000 units.

 

For research enquiries, please email research@orangetee.com

(By OrangeTee & Tie)

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