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  • Writer's pictureChristine Kang

Will COVID-19 Affect Singapore Property ?

This article discuss on the effects of COVID-19 on Singapore Property Market.

dated 6 April 20

The Outbreak

According to the South China Morning Post, the Chinese government data revealed that the first known casualty of COVID-19 in China can be traced back to 17 November 2019.

The disease has since been spreading over the world and was declared a pandemic on 11 March 2020 by World Health Organisation.

covid-19 pandemic  global crisis

Singapore confirmed her first case of COVID-19 patient on 23 January 2020. The Multi-Ministry Taskforce to fight against COVID-19 has since implemented a series of measures and restrictions to contain the spread of the disease in Singapore.

These measures include disbarring all short-term visitors into or transiting through Singapore, restricting the entry of work pass holders, safe distancing measures and restricting gatherings up to 10 persons in public areas and workplaces, closing all bars and entertainment venues like night clubs, discos, cinemas, theatres, and karaoke outlets, reducing operating capacity within shopping malls, and suspending all organised tours in public venues, centre-based tuition and enrichment classes as well as all religious services and congregations.

With a growing sign of unlinked community spread, the government had decided to further impose “circuit-breaker” measures to curb the spread from 7 Apr to 4 May 2020, by closing all schools, shutdown all non-essential businesses and urged people to stay at home.

How is COVID-19 going to affect Singapore’s Economy?

Although it is still in the early stages of the outbreak, the COVID-19 will have a significant impact on the global economy. Especially, experts have predicted that it may last until at least the end of 2020.

Following widespread of the disease in Europe and America, most of the countries have declared a total or partial lock-down and restriction on inbound and outbound travellers.

Inevitably, the hardest hit industries in Singapore would be the tourism-related, such as hotels and airlines, in which Singapore Airlines (SIA) Group has grounded 138 of its fleet of 147 planes from SQ and SilkAir, while Scoot is grounding 47 of its 49 aircrafts.

Impact of pandemics affect all airlines

Looking back at Singapore’s economic growth during the past crises, we can see that the effect on the growth rate during the outbreak of SARS in 2003 was very much less as compared to other financial and economic crises.

Singapore gross domestic product

However, we must also note that the outbreak of SARS mainly affected places in China, Hong Kong, Taiwan and Singapore, Canada and Vietnam, which has a higher number of SARS casualties. While the United States and other countries had much more manageable numbers.

sars cases in United States are more manageable

And unlike the SARS, COVID-19 has affected key economies like China, Europe and the US.

Furthermore, the financial markets have reacted negatively due to fear of economic uncertainty, resulting in the stock markets plummeting over the last few weeks.

distribution of covid-19 cases

Therefore, we can expect the impact of COVID-19 to Singapore’s economy to be much worse than the SARS, and it probably would be the worst economy crisis since Singapore’s independence.

In fact, the economy growth for Q1 2020 has been estimated to contract by 2.2% for year-on-year basis and shrank by 10.6% for quarter-to-quarter basis, mainly due to its impact on construction and service industries.

The Ministry of Trade and Industry has further downgraded Singapore’s GDP growth projection for 2020 to between -4% to -1%. Singapore’s government has been quick to intervene in the economy downturn and has announced a supplementary budget for 2020 – the Resilience Budget – to fund extraordinary measures in helping Singaporeans and the businesses ride over this crisis.

unity budget resilience budget solidarity budget

With the implementation of the “circuit-breaker” measures, the government has pushed out another Solidarity Budget to assist companies and workers affected by the temporary shutdown of businesses during the period.

So, with a less than promising economy outlook, how will it impact Singapore’s property market?

Impact of COVID-19 Outbreak on the Property Markets in Singapore

How will it affect Sales of Private Residential Property?

By comparing buyers by nationality for the sales of private residential property in January and February over the last four years, we can see from the chart below that the Chinese nationals constitute about 8.3% to 8.8% of total buyers from 2017 to 2019.

However, there was a decline of Chinese buyers, by almost half, to 4.3% in the first two months of 2020. This would probably be attributed to the COVID-19 lock-down situation in China.

Therefore, with the barring of short-term visitors into Singapore as part of the COVID-19 step-up control measures, we can foresee that there will be an impact of the sales for the next few quarters, especially for the Core Central Region (CCR).

percentage of private property buyer by nationality

We should also note that Singapore’s economy shrank 11.8% during the SARS outbreak, but the residential property price index only declined slightly, about 1% to 2%. Furthermore, the sales volume for private residential property had, instead, increased during the period.

sales volume of new launch sales volume of new private residential property   sales volume of resale private residential property

Having gone through the SARS crisis, Singapore is in a better position, not only to fight against the pandemic, but also more ready to absorb the impact on its economy, while positioning for its swift recovery after COVID-19 subsided.

Consequently, we may also see an active transaction of private residential property in Singapore following the outbreak of COVID-19, for the following reasons:

1. Diversion of Investments. The stock markets across the world were tumbling over the past weeks. It is likely to stay on the downside, while global recession has been anticipated. Investors who have divested their stocks from the markets, including SGX, would not want to return to stocks at this period of economic uncertainty – which may last for at least 1 or 2 years. So, they would rather look for alternative investment opportunity. Hence, private residential property will become an attractive option, which is relatively more stable to continue growing their capital.

impact on stock markets

2. Opportunities for Good Bargains. During such a down time, developers and property sellers are more willing to price their properties right - lower than their usual expectation.

Hence, there will be some home buyers or investors, who will seize the opportunities to enter the market and look for good bargains.

This is evident with new private home sales in February 2020 after the outbreak. The sales volume has more than doubled the sales for the same month in 2019.

Good turnout at The M showflat

In some recent new launches of private condominiums, the response was overwhelming. The “M” which is being priced attractively compared to the surrounding developments, with median price about 2,400 psf, has sold 392 of its 522 units.

While Lexus Hills sold all its final units. All in just over two weekends.

robust sales volume in singapore The M Parc Canberra Parc Esta Treasure at Tampines Jadescape
By middle of March 2020, almost all the units at the lower half of the towers at The “M” were sold, leaving with the units at higher floors selling at higher psf.

3. The Hong Kong Factor. The Hong Kong property prices have been on a decline since the Hong Kong protest in 2019. The tourism and retail sectors are badly affected by the violent protests, impacting its economic growth. With no clear end in sight for this political crisis, many Hong Kong residents and Chinese from the mainland have shifted their focus on property investment in other parts of South East Asia, in which Singapore is a choice location.

The Hong Kong protest

In addition, the South China Morning Post reported on 31 Mar 2020 of a spike in property sales after the China reopened from the nationwide shutdown.

Thus, upon lifting of the restrictions on inflow of travellers when the pandemic subsides, we would likely to see the return of these Chinese investors to Singapore property market.

performance of China property market after coronavirus crisis

4. Subsequent Influx of Capitals. Savvy investors with capital on hand will begin to enter the financial market during the market downturn sparked by COVID-19, especially when the stock prices are at extreme low.

Eventually, when the stock markets recover to its new peaks in 1 to 2 years’ time, these investors will divest the stocks to reap their profits.

Similarly, they will not want to throw back their gains into the financial markets at its peaks.

Hence, they will look for less-volatile alternative investments, like the property market, to continue growing their wealth. This new influx for capitals in the market may further push up the property prices.

What are the effects on sales of HDB Flats?

HDB is mainly catered for Singapore citizens with strict eligibility criteria to qualify for a purchase and its subsidies. These buyers are generally homeowners looking for a home rather than investors.

effects on sales of HDB flats

As such, the HDB resale market is likely to remain stable, though we may see a slowdown in transaction in the near-term. This is the effects from social distancing to minimise contacts, in which there will be a decrease in viewing appointments.

Once the pandemic is under control or subsided, the HDB resale market will gradually resume to its usual business level.

How about the Residential Rental Market?

In the near-term, the rental market will be affected by the control of foreign workers into Singapore. The property rental market depends on the non-residents, which accounts for about 1.68 million in the population. This includes the people working here, their dependants and international students.

According to the Manpower Ministry, about 30,000 work pass holders had returned to China for Chinese New Year break. Unfortunately, they will be stuck back in China as Singapore closes its border, despite the improving COVID-19 situation in China.

Coupled with the declining economic conditions in Singapore, many businesses may layoff the foreign employees or even close. Therefore, with less foreign residents here, the rental market for both private residential and HDB flats will be affected significantly in the coming months.

Can Commercial Property Market Survive COVID-19?

Commercial properties had been earlier projected as the forerunner for property investment in 2020. However, following the slip of global stock markets since 21 February 2020 arising from COVID-19, investors may be moving to the side-lines.

Most will be adopting a wait-and-see attitude, while waiting for markets to stabilise. Alternatively, they may park their spare cash in the residential property instead, as the demands for commercial may be gloomy in the near term.

performance of retail shop during crisis

On the other hand, the government had raised its Disease Outbreak Response System Condition (DORSCON) level to Orange on 7 February 2020, which resulted in numerous cancellations of large-scale events.

Following new measures to further reduce social contacts, and to close schools and non-essential businesses, we are seeing many companies start implementing working-from-home.

Most people are also staying at home and no one is dining out. With fewer workers going to office and people curtailing their spending, the businesses in the retail sector will suffer from the lack of shoppers even after it resumes operations. Some shops may be compelled to close due to losses.

Furthermore, with the widespread practice of working-from-home, office areas will be less required than before. Hence, the demands in commercial property rental will also likely to see a drop.

office property price rental indices occupancy rate

Therefore, like the SARS period, we can envisage a decline in both the rental and sales in the commercial property market in the coming months.


The impact of COVID-19 will be substantial to the world economy. A global recession seems inevitable. Largely attributed to the decline in demands for goods which is caused by the uncertainty, panics and lock-down policies.

Smaller and newer firms that depend very much on cash flows, may be forced to close due to the decline in demands.

Consequently, it will lead to a rise in layoffs and a further decline in consumption.

As transactions take months to complete, the property market is intrinsically slower moving than the financial markets.

The good side of this is that temporary disruptions are unlikely to cause immediate volatility for property investors.

Nevertheless, this intense uncertainty is likely to end up with lower transaction volumes for the entire property market for a period, as most buyers will take a wait-and-see approach.

While investors will be reassessing the market, which may also leave some sellers without a way to divest their properties. Some may be able to hold through the slowdown, while others may not because of hefty mortgage payments, or who are facing a sudden loss of tenant incomes.

These sellers may need to make their properties more attractive than others, in order to entice people to buy. So, buyers may be able to pick up some good bargains during this period.

In conclusion, the COVID-19 is likely to affect the property markets in the short-term. Nonetheless, with government interventions globally to lift the economies, the property markets will likely have a quick recovery once the COVID-19 pandemic subsides.

If you need any assistance on Singapore property, please call me @ +65 98620710 for a non-obligatory discussion.


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