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2020: Property Market Outlook

singapore property market outlook post COVID-19

2020: Singapore Property Market Outlook

A COVID-19 update

how coronavirus pandemic COVID is affecting singapore property market

After penning the original article in December of 2019, the events that happened at the turn of the new year warranted an update to the original 2020: Singapore Property Market Outlook. The update comes before the original article, to skip the update and read the original article, click here.

Even before this pandemic, known as COVID-19, started wreaking havoc across the world. The world economy was already on shaky ground due to the protracted trade war between the U.S. and China. Now with this coronavirus crisis, it is not only causing a great loss of lives but also taking a huge toll on the global economy. And it is accelerating the decoupling of the U.S – China economy.

Some are already calling it the biggest global crisis since World War II or the Great Depression. It has forced many countries to close off their borders. Shut down many businesses. And made their staff work from home. Schools are also closed. Laws were passed requiring everyone to remain at home. While some countries didn’t initiate a complete lockdown, it nonetheless severely restricted the movement of its people. Causing severe disruption to the global supply chain. 

singapore circuit breaker covid lockdown

Recognizing the strain these measures have caused the economy, governments around the world are introducing all manner of stimulus to keep the economy going. From the lowering interest rates and pumping in a record amount of liquidity into the market. It has also prompted many countries to turn inwards toward isolationism after many years of embracing globalisation. Well, when it is concerning their economy, at least.

world central bankers stimulus for covid

Stimulus and its economic implications

World stimulus

As of this writing, countries around the world have pledged more than US$ 8 trillion to support their people and economy. However, according to experts, that is not enough! As a point of reference, some estimates had the U.S. government pumped in US$ 23 trillion in bailouts and programmes to stem the loss from the 2008 Global Financial Crisis (GFC).

The U.S. stimulus – lower interest rates

The U.S. has set aside US$ 2.3 trillion to fight the coronavirus, that is just one-tenth of what it spent to rescue its economy from the GFC. Is that sufficient? That is a matter currently being debated hotly by the economic pundits and policymakers.

In addition, the Federal Reserve Bank (Fed) has aggressively lowered interest rates since early March by 1.5% to near zero. Effectively lowering the cost of borrowing for consumers and businesses. The Fed also employed a highly effective tool, called forward guidance, that they honed during the GFC. In it, the Fed chairman, Jerome Powell said, “until we’re confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals.” What he and the Fed is hoping to achieve is to put downward pressure on long term rates, therefore we should see loans like mortgages remain low.

The Fed has also resumed their Quantity Easing (QE) or purchase of Treasury and mortgage-back securities. QE made its first appearance during the GFC but was revived and its size unrestrained come late March.

And much more, but it is beyond the scope of this article to cover everything, thus, if you are keen to get in-depth details of the Fed’s actions, please head over to this excellent article by The Brookings Institution.

The Singapore budget

singapore budget 2020 to support covid

Singapore’s government came up with an unprecedented 2 supplementary budgets to address the pandemic. A slew of measures aimed at saving jobs, supplying liquidity and direct stimulus. At a cost of S$60 billion that will hopefully stem any bankruptcies arising for this pandemic. 

A notable support measure is the six-month relief in making payments of loan instalments and rental of commercial premises. This is an important move to free up cash flow for businesses and consumers. As they are both reeling from the drop in economic activity and income, these deferments, and not write-offs of obligations, gives everyone some breathing room. 

The consumers and business need not wind up due to inability to pay their debt obligations. While the banks need not commence proceedings against the defaults, seize and dispose of assets that may be declining in value. And in the process exacerbating the market for these assets. 

The budget also catered for wage support to employers, which will serve to preserve jobs and aid recovery when the virus is under control. We won’t dwell in great detail all the support and measures. Instead, let us take a look at how this and the pandemic has and will affect the local real estate market.

where is singapore property market headed post COVID

How will it affect the local property market

As in any crisis, there are definitely winners and losers. The winners are certainly the pharmaceuticals and health care as are the tech and even fintech sectors. However, the losers will include the hospitality, tourism, oil and gas sectors. How about real estate? I would classify it as suffering from this crisis too.

Expect a few quarters of the price index softening. Will it crash? The case for a huge crash isn’t strong. Here are some factors that will support and pressure prices.

Lower interest rates mean enhanced holding power as mortgage payment will be lower. However, will the prolonged low-interest environment stoke inflation down the road? If it does, then holding real assets will hedge against erosion of buying power. 

5 Things to know about when choosing your mortgage

The 6-months deferment of mortgage payments will ease any short term cash flow crunch due to reduced income, thus also boosting short term holding power.

Will the wage support save jobs? When jobs are preserved, people need not unnecessarily liquidate their assets thus reducing fire sales and a depressed market.

Preceding property cooling measures like the TDSR and earlier cooling measures, implemented from 2011 until the last one in 2017, prevented weak hands from overleveraging. Because of these, we are now reaping the rewards of mainly having property owners that are financially sound and could weather this crisis better.

huge wave of HDB coming MOP

2020 will have a massive wave of HDB fulfilling MOP. Pre-COVID, we expect a wave of selling and a slew of upgraders seeking ECs and condos. However, with the COVID situation upending the economy, would this will unlikely to be the case. If any, it will be more subdued as people are more cautious. Thus, prices for HDB should hold firm, while prices for resale non-landed private property (ie condos) should see some downside pressure. 

What is conspicuously missing from the stimulus announcements are support measures for the developers. They are presumably still faced with the same dateline to complete and sell out their developments or be required to pay additional taxes. Not only has this health crisis caused a delay in their construction, but it has also dampened demand for properties in the short term. 

Will the developers be dangling discounts to shift more units? I think it will be likely especially if they still have a large inventory of unsold units. But those with a low inventory and little land bank, might not be in too much of a hurry to offload their remaining units. 

partially completed projects

Our research shows that a majority of developers would need to replenish their land bank in two to three years time. This could be delayed with the pandemic situation but will still occur a year or two after the recovery from this crisis. We will delve deeper into this in a future article, stay tuned. 

Depending on how successful they are in replenishing their land bank and how quickly the market recovers, the developers may even raise the price of their dwindling unsold inventories to match that of the rising market.

What does it mean for you?

If you are a homeowner sitting on positive equity. Withdrawing equity from your homes to finance equity investment, since the financial market is now in a rout, could be a possible move. But is this the right move for you? Do consult with your trusted adviser should you be considering this. 

straits times index

If you are looking to invest in real estate and are in solid financial standing. This period might be the best time to pick up your prized asset. As there is less competition bidding against you, you get to pick and choose. 

The sellers or developers might be more inclined to consider offers too. But as I’ve said earlier, the strength to hold not only applies to individual owners, the developers generally aren’t in a terrible position too.

According to SingStats Yearbook of Statistics 2019, the growth in liquid assets among Singaporean and PR household has outpaced the growth in liabilities.

Moreover, with the Singaporean households’ and the developers’ balances sheets still pretty healthy, I won’t expect fire sale prices if this health crisis is brought under control within 6 to 9 months. If it drags on any longer, expect prices to come down more significantly.

singapore private property developers are offering discounts

Or should you wait? As some experts posit, the virus can’t be eliminated so easily. If it is contained in one place, it can sprout again in another location.

Thus the pandemic will be with us, albeit in a less serious manner, for an extended period of time. That would mean economies around the world will be in low gear and may even be contracting. This will certainly weigh on asset prices. 

As it is, the recent rout in crude oil could be an indicator of how serious the demand destruction is for the economy.

With more people working from home, there is less demand for transport. Overseas business trips and leisure travel has almost fallen off the clift. Going forward, working from home might become a norm rather than an exception. 

The bottom is likely not been put in yet, at least not for the stock market. Bear in mind, the stock market is a leading indicator for the property market. That said, very few can time the bottom perfectly.

What we can do is to recommend buyers and investors to price in their own margin of safety & calculate their own affordability to hold for at least the next 2 years.

Government action to tackle the pandemic

News coverage of the pandemic around the world revealed an interesting thing. How governments around the world tackle this pandemic will influence how investors should put their funds.  

In the past, the might of a nation lies in its military strength. But, as we have seen from the events these past few months, power is redefining itself.

Far-sighted leaders that are able to anticipate emerging threats. Manage crisis with competency and deliver outcomes that save lives and livelihoods, without compromising on society’s values.

Benchmarked against the above, major powers like the United States, China or Russia, would have failed. China and Russia’s initial reaction was denial, letting the virus spread widely before imposing extremely harsh lockdowns.

And how about the U.S.? It is now paying the price of having the largest death toll in the world. It is all because of a president that first poo-pooh the threat, then turned his attention to wild and dubious cures and then went hunting for scapegoats to turn attention away from his bungling.

Some governments may make the mistake of relaxing the lockdown too soon and risk the resurgence of the virus. Seeing how President Trump encourages protesters that demand the reopening of their states sooner rather than later, indicates how politically driven different government tackles the crisis. Contrast this with how some other Asian countries are weighing their options, it is clear the difference in priorities. 

via GIPHY

Lockdowns and social distancing measure have shown to be effective in controlling the spread. However, they exact a toll on the economy. The question policymakers and government the world over is to strike a balance between cost and human lives. There is an excellent article on the World Economic Forum on this and detail study on this by Imperial College London.

Post COVID-19

Let’s take a look at how this COVID-19 crisis will shape the world. What new behaviour or belief will change as a result of this pandemic. As we continue to fight this virus, there will come a day when we will overcome and normal life will resume. However, even when some form of normalcy has returned, we could have some behaviours and beliefs that will carry forward from this very trying period.

Wuhan post COVID lockdown Wuhan post-COVID lockdown

Past efforts to promote telecommuting have had little success, but with this pandemic, we can clearly see that a large number of us could feasibly work from home. Moreover, it would help cut down pollution and save time from commuting daily. Maybe a mixture of going to the office and working from home will be the norm going forward.

Would this drastically change the office space landscape? Offices will still have a central role to play in offering a space for employees to collaborate, interact and bond.

Some functions that can operate remotely may see a scale-down of their office space. Others that can’t, will choose hot-desking as an option. Co-working spaces could also be a beneficiary in this shift.

Shrinkage of other supporting commercial space in the Central Business District could also occur as a result. There is simply less lunch crowd to feed or shoppers to cater to. Traditional retail spaces have already been facing strong headwinds since the rise of e-commerce, but with lock-downs and social-distancing, it could spell the final blow to the shop space. 

Mass transit could experience lower ridership. That, in turn, could mean lower investment in public transportation in the future. However, other forms of transportation, specifically for goods may experience a rise. 

For residential properties, as more people will be spending more time at home, subtle shifts in consumer demand may see bigger, more spacious units return to favour. This is at odds with the trend of smaller homes that I have written about in the earlier version of this article. How this will pan out as affordability dictates the smaller sizes, we will have to wait and see.

The price differential between core central region residential properties and those in the suburbs may narrow as commuting becomes less often to justify paying a high price. And in order to enjoy a bigger living space, demand for housing could also shift to the outskirts where property prices are also less costly.

Could society come to realise that obsessively and incessantly raising material living standards comes at a price during times of crisis like COVID-19? Could we then be more tolerant towards less economic growth in exchange for more spare and idle capacities like hospitals etc? And with more redundancies too? Could our dormitories be more spacious, more humane but less profitable? 

foreign worker dormitory in singapore

Adding to the discussion on economic concentration. After this pandemic episode, many countries would be having second thoughts about completely relying on a handful of countries to produce critical items like medicine, vaccines, ventilators, masks etc.

When a crisis hits, supplies are cut off. Countries like the U.S. are increasingly calling for a return of their manufacturing capacities to the U.S. even before the coronavirus brought home this point.

Would this translate to some form of support for our local industrial properties? Possibly, but unlikely as our domestic market is too small. Singapore instead, relies on global trade, which we have to be concern about in the face of increasing isolationism and protectionism we see in the world today. 

There are also numerous cases of xenophobia and racism rearing its ugly head from the fear of the coronavirus. Although mainly Chinese or Asian people have been at the receiving end of such abuse. There are cases of Africans being slighted in China. Would this result in more Chinese national shunning migration, working, or studying the U.S, European countries, Australia and New Zealand?

What about our psychology? Wuhan, the epicentre of this virus was locked down for almost 11 weeks. Lifted recently, life there is far from back to “normal”. Would investors come out of this pandemic having altered thoughts on investments?

Would we emerge from this crisis giving greater emphasis to non-material things, such as health, spirituality, the environment, nature, peace, quietness, etc? Would we shift from a worship of the gross domestic product (GDP) and unadulterated pursuit of material wealth to some other indicators like Gross National Happiness?

Take for example the Great Financial Crisis. The investing public became much warier of arcane financial products. Investor education was stepped up to prevent the public from falling into the same traps in the future. More investors started to take an active role in managing their investments. Hard assets also became favoured over financial witchery. 

Looking ahead, it will certainly be no longer “business as usual” post-COVID. I would love to hear your thoughts on this, please share in the comments or pm me for a private discussion.

growth and risk factors driving singapore property prices

The above graphic is a quick summary of the risk and growth factors which I think will drive Singapore property prices in the coming two to three quarters.  


Singapore City Skyline shows the vibrancy and prosperity of the economy and the property market
Marina Barrage (Photo Credit: Gary Choo)

2020: Singapore Property Market Outlook

2020 is just around the corner, where is the Singapore property market headed and what can we expect? Amidst all the year-end trips or gatherings with our family and friends, let us take a moment to ponder this question. I’m sure a good number of you are also eagerly awaiting your bonus and already thinking of what you can do with the spare cash. Perhaps with the money you’ve put aside, you can plant the seed for future returns.

On that note, let’s get the discussion started. Read on to find out my thoughts about the year ahead. And I would love to hear your thoughts too, leave a comment below or PM me what you agree or disagree with this article!

2019: Turbulent but Stable 

2019 has been a year of ups and downs. The global economy has its instabilities with US-China trade wars, tensions between Japan and South Korea and the whole Brexit ordeal looming over Europe. More mass protests are taking place the world over in any time in history, notably in Chile, Venezuela, Lebanon, Iraq, France and nearer to home, Hong Kong. The Hong Kong protests have been a continuous fixture of concern as the protest, started in July are growing increasingly violent. With such uncertainties, Singapore appears increasingly attractive given its resilience and stability. We even made it to the top of the list for real estate price increase in 2020


Some of the instantly recognizable icons of Singapore - the Marina Bay Sand and the Merlion
Merlion and Marina Bay Sands Singapore Skyline (Photo Credit: Shutterstock/Richie Chan)

End of Year Numbers and Trends

With the end of the year approaching quickly, here are some of the trends gathered in the previous few months/this quarter:

Promising Sale Numbers?

Although the demand for properties has been relatively robust following the introduction of the latest round of cooling measures in July of 2018. Would this demand hold up in the face of the unprecedented number of new launches this year?

As you can see in the chart below, the take-up rate (the line) has been rather tracking closely to the units launched by the developers (the bars).


This chart shows the correlation of the demand for private properties is closely correlated to the supply of new units from the developers
Number of private housing units launched and sold by developers (excluding ECs), source: URA

This healthy demand could be due to the tight labour market, fairly robust household balance sheet and low holding cost afforded by the low interest-rate environment. Without going into too many details, the other factors that I’ve identified are waves of HDB upgraders (watch out for my future article on this topic), en bloc money and flight to safe-haven and safe assets.

With a meaningful volume of transactions, we can then take a look at where prices are heading. Prices have fluctuated by -0.7%, 1.5% and 1.3% for the first three-quarters of this year. And when compared to the third quarter of last year, 2018, prices have increased by 2%.

As of the end of September 2019, there was an unsold inventory of about 32,000 units. To put that into context, the historical average number of unsold units hovers in excess of 25,000 units, with the lowest ever number recorded in 2017, when it was around 18,000. Is that high? Or would our natural annual take-up rate of 8,000 to 10,000 units take care of the excess in just one to two years, assuming little or no excessive new supply?

Prices for private properties are still on a up trend

Where do you think the prices will head? My take is that prices will continue to follow the trend of the last few quarters for the first half of next year. Thereafter will depend on the usual suspects like election performance (Singapore’s) and other major election outcomes. The resolution or exacerbation of trade tensions and the various mass protests. It doesn’t help that the economic cycle is long “overdue”. Would the recession be shallow or a deep one?

Rise in Rental

Next, let’s look at another important segment of the market. From November 2018 to 2019, non-landed private residential rent has risen by 4.6% but still a long way off from the peak in 2013 by 16%. Nonetheless, the rental market has stabilised and recovered from its trough in 4th quarter of 2017. This is good news for property investors as the recent yield on properties is barely above mortgage interest rates.

Singapore has a vibrant rental market as it is welcoming to expats living and working here

Occupancy rates have also bottomed out, recording the lowest of 92% (very high by global standards) from 2014 to 2017 even when there is a steady increase in the number of units for rent. My opinion is that the flow of immigrants might have slowed in the last couple of years but will be picking up, possibly after the election, so as to keep pace with the target growth rate set for in our population plans.

Occupancy rates of private property in Singapore is consistently high despite having increasing number of units in the market

Going forward, Singapore could benefit from multinational corporations possibly redirecting their offices in Hong Kong or the UK (check out my article on Dyson if you would like to learn more). Such relocation will result in a strong shot in the arm for our leasing market.

New Launch Market

New launches are a common sight in Singapore currently. As you travel around Singapore, whether by train, bus or car, it is not usual to see an advertisement for a new launch or directions to the show flat. As we covered earlier, the unsold units are higher than the past averages, however, seeing as the take-up rate is still pretty healthy and the $psf pricing making ever new highs, is this sustainable?

Singapore new launch condos

With an abundance of choice in the market, property developers in Singapore are upping their game to stand out from their competition. New launches are popular among Singaporeans not only for their features and amenities but also their potential for capital appreciation and as an investment. With $psf so high and so far detached from resale condos, is it still a wise choice? And with the plethora of choices, how do you choose? This is a whole topic unto itself, maybe for another day!

The Trend of Smaller Houses

Although apartment sizes are getting smaller, properties in Singapore are still generally considered livable

This is by no means a new phenomenon, it probably started as far back as 10 to 15 years ago. And really became intolerable and invited lots of complaints resulting in the authorities implementing certain rules to prohibit sales of “wasted space” like bay windows, or overly large balconies or roof terraces.

The latest announcement from URA concerning this aspect was in October 2018 when it raised the average minimum size of apartments to ensure that they are more livable.

There is no mystery as to why smaller units are more popular. As $psf is increasing at a fast pace, incomes are sometimes lagging behind, thus in order to make new launches affordable, the developers are resorting to apportioning a greater share of smaller units in their unit mixes.

However, this rise in $psf can’t immediately translate to the resale market as the sizes of older properties tend to be larger and the meteoric rise of the $psf is pricing units out of reach of buyers.

Since the aforementioned URA guideline will take effect for new development applications submitted on or after Jan 17, 2019, it will be interesting to see how sales will be like for these newer developments.

Yet another reason for the trend to smaller houses is the fact that the average household size has been shrinking over the past decade. 

property market outlook

Source: Singapore Department of Statistics (Singstat)

Having said that, with the developers continuing to push the envelope in making smaller units. We should see per square foot ($psf) pricing continue to creep up.

Interest from Foreign Investors

Following up with what we said earlier in this article as the world becomes more turbulent, Singapore appears even more attractive to wealthy investors. Another factor adding to this allure is also our strong currency. Did you know that the Singapore Dollar is one of the only four currencies in the world that appreciated against the USD in the last decade?

Singapore's ranking high globally on various factors ranging from education, economy, liability, political stability

We love being the top ranking in lots of things, don’t we? Jokes aside, these rankings are a testament to Singapore’s attractiveness to foreign investors and businesses. Being number one and two for the most competitive economy and easiest place to do business respectively means many multinational companies have or would want to have a presence here. This will, in turn, drive up demand for housing for their staff.

Our zero capital gains tax and political stability appeals greatly to investors looking to secure and grow their wealth. Being a much smaller country and economy, Singapore attracted $76 billion and $78 billion in 2017 and 2018 respectively as compared to $134 billion and $139 billion for China!

The modern and iconic Singapore city skyline
Iconic Singapore Skyline

There seems to be a growing international attractiveness of Singapore as a place for property investment. This is especially so with the standout case of Dyson moving their family office to Singapore, along with purchasing two residential properties.

There are also numerous notable investments by wealthy individuals that didn’t quite make the headlines, happy to share them with you when we meet.

With many attractive qualities such as those listed above and many more, Singapore is a hot favourite among other countries and foreigners to do business with, visit and more.

In Conclusion, Property Market is Broadly Stable, for now

“The property market is now broadly stable, but risks from trade rows and geopolitical tensions could still hit the sector, Second Minister for National Development Desmond Lee said yesterday.” (Source)

All in all, the prospects for 2020 looks good. Although it is still unpredictable given the uncertainties of the global and regional circumstances, at least for now, there are some grounds for there to look upon the property market positively.

The Big Question: To Buy Or Not To Buy?

With all the news, some people may want to wait for the correction. The question is, what is the magnitude of the correction we can expect? As mentioned in my previous Investment Article, the magnitude of the correction will determine whether it is worthwhile.

Take this as an example. A recent article revealed that 6 in 10 Singaporean millennials are saving over 20% of their salary. Yet, many predict themselves to not have much funds down the road after eventually taking on financial burdens like homeownership, marriage and having children. However, there are many possibilities that people can tap into.

For instance, two millennials can pool their savings to co-invest or people whose parents have a sizeable saving can tap on that (such as to loan from their parents first) to jumpstart their property investment. You can check out my YouTube channel to learn about these strategies and more.

It’s cliche but as they say, when there is a will, there will be a way.

We’re lucky to be born in Singapore, home to many conveniences, privileges and luxuries in life. When a good platform has already been set up for you, it would be prudent to take advantage of it and gain an edge. This is a great place to go into property investing indeed!

I will be here to bring you more news and updates about Singapore’s property market and I hope you thrive in your property investment. May 2020 be another wonderful and blessed year for everyone!!

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