Transactions Volumes 'Dived'
We are in the 2nd month of the Circuit Breaker and sentiments have remained the same since the lockdown started in Singapore. Generally, transaction volumes have taken a hit (for obvious reasons such as no viewings). Prices have remained resilient thus far.
In April, private home sales dropped 62%, while HDB resale transactions dropped 78%. These results are largely attributed to the restriction of viewings and stay home measures since 7 April 2020.
Government Support for Singaporeans and the Property Market
Since February, there were talks and suggestions for the government to step in and provide assistance to developers who are affected by the circuit breaker and construction projects being on a standstill due to the spread of Covid-19 in the dormitories.
On 6 May 2020, the government had announced that they are granting an additional 6 months extension for project completion and sales. With this, the regulation with regards to Additional Buyer's Stamp Duty Remission and Qualifying Certificate were relaxed and developers have more time in achieving their target of building and selling all units in their projects within a 5 years period. Ultimately, this will help developers who are in a generally good financial position to hold out to their current prices while waiting to see how will the entire Covid-19 situation pans out moving forward.
Besides developers, home buyers were also given assistance. Namely those who bought directly from developers have more time to make payments for their purchases, and as well as married couples who are switching matrimonial homes (buy then sell).
On a whole, on 26 May 2020, the government introduce a 4th Budget to support Singaporeans in the crisis.
"Altogether, the Republic will have dedicated S$92.9 billion — about 20 per cent of the value of Singapore’s economic output each year — to combat the economic fallout from the virus." - TODAYonline, 26/5/20
For comparison with past crisis, these are the amounts provided by the government to combat the negative economic impact when a crisis occurs:
“The biggest had been the S$20.5 billion Resilience Package rolled out in 2009 during the throes of the global financial crisis. Other off-Budget packages announced during the downturns of 1998, 2001 and 2003 ranged from S$230 million to S$11.3 billion.”
For Covid-19, the government is pumping in more than 4 times the amount during the Global Financial Crisis of 2009.
Property Shopping Goes 'Online'
April was a month of learning and adapting to working from home, and the real estate market is no different. In May, more and more people are getting used to the new reality and property viewings are transitioning from the usual physical viewings to online viewings, where all parties join in a Zoom meeting and start interacting with one another. Sellers using their mobile phones to walk around their home which is for sale, and buyers asking questions and requesting to view certain parts of the unit through the lens of the seller's camera. Of course, agents are also present to facilitate.
For Developers sales, agents like ourselves are all equipped with virtual tours and all relevant information to provide a detailed run through of the options to provide buyers with a good understanding through an online meeting.
Savvy Buyers Who Have Prior Knowledge Are Still Taking Action
Buying a property during the circuit breaker has transitioned more from emotional buying to buying which is based on facts and figures. This is why the deals which are done during this period are largely developer sales, which continue the trend of having options which presents value even in view of the current crisis. The positive mid to long term prospect of the Singapore Real Estate market also is a plus point for the wealthy to keep their money 'safe'.
Who are the buyers?
- Foreigners who want to keep their money safe in times of uncertainty
- Foreigners who are on the lookout for 'trophy' assets
- Singaporeans who are looking to keep their money in a safer asset VS being heavily exposed in the stock market
- Singaporeans who are in the midst of upgrading from their HDB flats to Private Condos
What Are Some of the Properties Being Sold
In the resale market, what is notable is that trophy assets such as the Ardmore Park penthouse (bought by Vicki Zhao's husband) for $28M.
"April saw a higher number of expensive homes sold. Transactions in the core central region (CCR) were 36.8 per cent versus 6.8 per cent in March. CCR sales came to 102 units, more than double the 45 units in March." - The Business Times, 15 May 2020
On the other side, affordable new launches are also continuing positive momentum due to the fact that affordability is still largely present, with the government helping companies to retain jobs amid the crisis. Below are the top sellers from 6 April (start of CB) to 17th May 2020.
What Will Happen After Circuit Breaker is Over
For a start, the government had mentioned that real estate activities such as viewings will NOT resume after the Circuit Breaker, and likely it will be under Phase 2 of the 're-opening' of Singapore.
Business will not be as usual and 'Zoom-ing' for property related advise and information will very likely be a new norm.
Demand will likely see a spike, as we have observed in property markets in China and Hong Kong. The 3 months (or more) of people being unable to view properties would have caused a significant amount of pent-up demand. And we will see a big spike in transaction volume when the lockdown eases.
For Clarifications and Further Understanding
Feel Free to Contact Lincoln @ 97500397