Singapore has gone through a lot since the COVID-19 pandemic began in early 2020. Last year, there was the Circuit Breaker, which put a halt on non-essential activities, including property viewings and showflat visits. With this year’s Phase 2 (Heightened Alert), it felt almost like déjà vu. So how did the Singapore property market react to the recent ‘soft lockdown’?
Circuit Breaker vs Phase 2 Heightened Alert
To control the spread of community cases, the Government put in place a Circuit Breaker on 7 April 2020, which was to last one month and three weeks until 1 June 2020.
During the Circuit Breaker, the nation screeched to a halt as residents were made to stay home and all non-essential workplaces were shut. Service providers such as hair salons were not allowed to operate and dining-in was forbidden, forcing F&B establishments to turn to food delivery. The measures also disallowed viewing of property in-person, so real agents and prospective property buyers had to turn to online viewings.
The Circuit Breaker was followed by months of relative peace. By August, cases had fallen sharply, turning Singapore into a global COVID-19 success story. Measures were relaxed, businesses reopened, and people were eventually allowed to meet socially in groups of up to eight.
However, 2021 has brought its own set of challenges. Despite the arrival on the scene of COVID-19 vaccines, the Delta Variant caused a spike in the number of community cases in late April, prompting the government to introduce a new raft of measures.
From 16 May to 13 June 2021, Singapore went through Phase 2 (Heightened Alert). Group sizes for social gatherings were reduced to just two, dining in was not allowed and businesses were required to have employees work from home wherever possible.
How Did the Property Market React During the Circuit Breaker in 2020?
During the 2020 Circuit Breaker period, developers were forced to keep their showrooms closed, and live viewing sessions could not be conducted.
As such, it is not surprising that private home sales fell 12% and prices fell 1% in the first quarter of 2020. Similarly, HDB resale transactions plunged 41.9% in Q2 when the Circuit Breaker took place, and the May 2020 BTO launches were postponed to August.
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The measures as well as the pandemic at large also resulted in construction delays. Construction work was halted during the Circuit Breaker, and developers were hampered in trying to import migrant workers from abroad. To make matters worse, the construction industry was also plagued with materials supply disruptions. This could have made buyers more reluctant to commit to BTO flats or new launch condos.
To the surprise of analysts, the property market rebounded strongly after the Circuit Breaker. In August 2020, new private home sales reached an 11-month high as buyers swooped in, releasing pent-up demand. Meanwhile, HDB resale transactions spiked 12.3% in Q3.
Strong sales continued for the rest of 2020. Prices of private residential properties rose by 2.1% in the fourth quarter of 2020 on the back of high demand. In a similar vein, the HDB Resale Price Index rose 3.1% in the same quarter.
How Did the Property Market React During the Phase 2 (Heightened Alert) in 2021?
Fast forward to 2021, and the property market seems to once again have gone through a slump during Phase 2 (Heightened Alert).
The cap on group sizes meant that that groups of no more than two, including the real estate agent, were allowed to turn up for property viewings. The number of visitors allowed per household per day was reduced to two, which meant that sellers were severely limited in the number of visits they could accept per day.
At present, while Phase 2 is over, real estate agents are still prohibited from marketing their properties in public places or conducting open house activities.
The restrictions have dented property sales somewhat, with URA data indicating a 29.7% drop in the number of private home and Executive Condominium (EC units) sold in May compared to the previous month. Conversely, new home sales increased by 83% year-on-year.
Based on URA’s flash estimate of their Q2 2021 Price Index for residential property, the private residential property index increased by 0.9%, down from the previous quarter’s 3.3%, indicating that the frenetic property buying has slowed.
Meanwhile, flash estimates for the HDB’s Resale Price Index have indicated a 2.8% rise in Q2 2021, down from 3.0% in the last quarter.
Although Phase 2 (Heightened Alert) seems to have caused a fall in home sales, its dampening effects are nowhere as dramatic as those of last year’s Circuit Breaker. Based on past experience, it is likely that the property market will rebound promptly in the weeks and months to come.
Singapore Property Remains Resilient Amid COVID-19 Safety Measures
The various waves of COVID-19 restrictions have appeared to take a temporary toll on real estate sales, but the residential property market has proven surprisingly resilient, rebounding very strongly after last year’s Circuit Breaker.
Although the recent Phase 2 (Heightened Alert) measures have caused a slight reduction in property sales, possibly due to restrictions on property viewing, the measures have not been as strict as the Circuit Breakers’, nor has the impact on property sales been as strong. Given last year’s spectacular rebound, buyers appear to have considerable confidence, and the slump is likely to be temporary.
As of June 14 2021, Singapore has moved into Phase 3 (Heightened Alert), and maximum group sizes have been increased from two to five persons, making it possible for up to four people to view properties together with an agent.
This is likely to encourage homeowners to set up more viewing appointments and boost buyer convenience and confidence. In addition, developers who put their sales on hold during Phase 2 (Heightened Alert) are expected to launch their properties in the coming weeks, further boosting transaction figures.
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This article was written by Joanne Poh. A former real estate lawyer, she writes about property and personal finance and spends her free time compulsively learning languages and roller skating in carparks.
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