Is It A Good Time To Buy A Property In Singapore?

Is It A Good Time To Buy A Property In Singapore?

Singapore’s property sector is feeling the impact of the circuit breaker measures imposed to curb the spread of Covid-19. Rachel Kelly speaks with Tricia Song, Director and Head of Research for Singapore at Colliers International Singapore on Powering Your Property to find out more.

Rachel Kelly: Year-on-Year resales in April 2020 dived 62%. They were also 66% lower than the five-year average volumes for the month of April. What do you make of the latest numbers?

Tricia Song: 309 private resale transactions is actually not too bad in comparison 180 to 200 units [sold] per month during the worst of SARS and Global Financial Crisis (GFC). There were still some transactions in April as some buyers have viewed the units earlier and they’ve exercised the option later during the month. So buyers typically have 15 days to exercise their option. So if you count the start of the circuit breaker till the end of the month, there were quite a few days for them to exercise the option.

I will be expecting the private resale transactions to plunge more in the month of May 2020. You see the effect of the circuit breaker more in May probably below hundred transactions purely due to the circuit breaker as you cannot view resale units for 2 months. While there are virtual viewings arranged by the agents or sellers, most buyers would prefer to wait to view and feel the unit [physically] before purchasing.

RK: Looking at the public housing market, HDB resale flat volume hit a 30-year low, falling 78% in April, with only 423 units changing hands. Is that the lowest volume on record?

TS: Yes, for public housing, the resale volume is already the lowest volume on record, [which is] even worse than during SARS and GFC. Back in April 2003 during the SARS outbreak, at least 2,000 units were sold back then as there was no circuit breaker and transactions could still happen as people could still view units.

RK: The SRX data also showed that overall resale prices just dipped by 0.2% over March 2020, 0.7% lower than a year ago. Can we expect prices to go much lower in the private resale market? Is this an indication of a trend that we're going to see as buyers expect rebound into the market after the circuit breaker measures are lifted?

TS: In general [regardless of unit sizes], prices should continue to trend downwards because of the weak sentiment and expected recession of the economy for the full year. Based on the trend for public housing, [prices for] executive flats fell the most by 1.8%, probably due to the larger quantum because they are the biggest in size. Prices for 5-room flats actually buck the trend. These transactions could be for the newer [properties] in good locations and have just reached their Minimum Occupation Period (MOP). A lot of new flats also came out from MOP late last year and this year, so buyers are still willing to pay higher prices.

RK: What kind of movement are you expecting for the year ahead for the private market?

TS: Since [before the circuit breaker], economists have brought down their economic forecasts [as we face] a full-fledged recession, which is probably going to be the worst recession that we have had for the last 20 to 30 years. As property prices are highly correlated to incomes and the economic sentiments, we're expecting prices to come off 3-5% reflecting the economic fundamentals.

RK: So, if we're expecting prices to come down by 3-5%, is now a good time to buy or to bargain hunt if you’ve got the cash?

TS: Yes, certainly. With prices trending down, this will be the best time to look and buy for those who are less affected by the economic downturn and who have been holding out and saving to buy a home of their own.

RK: If we look at pricing trends, where do you think holds the most opportunity for buyers in the overall market?

TS: It is unlikely that property prices will crash as much as 25% like [what happened] back during the GFC. If you're hoping that prices will correct 20 to 40%, I don't think that will happen. Back then before the GFC, property prices went up 50% within 2 and a half years as compared to now, prices only rose about 11% based on the Property Price Index. So, if you are getting prices that are 5 to 10% down, that’s a good enough bargain.

In fact, the government and MAS have come out with relief packages to allow mortgage payments to be deferred until the end of the year. Overall, there should be less panic and distress, but it does not mean [that there will be] no bargains. I think there are still sellers out there who really need to sell [their property]. They have more realistic expectations now. So, this is definitely a good time to look out for bargains, especially if you have a place [specific location] in mind.

Developers are now more willing to throw in discounts because of the uncertainties in the market. You may also want to position for future large developments or government-driven development projects.

RK: What are your thoughts on how the property market is going to shape up post-Covid 19?

TS: I think Covid-19 shows a lot of uncertainties but also a lot of opportunities, especially for property hunters. So, I would definitely take it with a positive view that there are actually many more opportunities for you to reshape what you need and your ideals for your future homes. For example, you may want to have a bigger apartment with more rooms so that you can have more privacy when working from home or for your kids to have the option of homeschooling. So these are all new ways of living as well as working going forward.

RK: If you're looking to change your property ideals, obviously affordability might be one aspect that you need to consider.

TS: Yes, definitely. I think affordability is still the key consideration as everyone wants a bigger space or more number of rooms, but you also have to bear in mind that you may not be able to afford the same [property] size in a particular location. So you need to weigh out your priorities – is it the location, size, [availability of] amenities, the prestige of the property, the proximity to your workplace, and so on. But Covid-19 definitely showed us that there are a lot more choices and considerations for your future home.

Listen to the full podcast to find out what are some of the properties and areas you could keep a lookout for:

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This interview was broadcasted on MONEY FM 89.3 on 12 May 2020.

Disclaimer: All analyses, opinions from interviews, recommendations and other information broadcasted, podcasted, published or printed herein are for general information. You should not rely solely on the said information and are advised to seek independent financial advice from your own financial or investment consultant prior to making any investment decisions. Before acting on the information you hear or read on MONEY FM 89.3, remember to consider if it is suitable for your own investment objectives and financial situation. SPH Radio does not accept any liability for any loss whatsoever arising from any use of the information broadcasted, podcasted, published or printed herein.

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