The effects of the COVID-19 pandemic have had far-reaching consequences on many aspects of our lives, from our working arrangements to how we spend our free time.
For buyers and sellers of property, the changes have been more subtle as the property market has rebounded strongly ever since the circuit breaker quarter. But beneath this facade of normalcy, things are not what they seem.
The PropertyGuru Consumer Sentiment Study H1 2021 found that COVID-19 is still having a significant impact on property buying decisions in Singapore. In spite of overall optimism, there is still unease amongst Singaporeans about the property market’s future, and hiccups in the property buying process have made transactions less predictable.
Top 3 Ways COVID-19 Is Still Affecting Singaporeans’ Property Decisions
On the whole, Singaporean buyers have been optimistic about the property market, with a strong spike in demand after the circuit breaker period. However, there have been some pain points.
As the pandemic drags on, the following factors continue to affect Singaporeans’ property decisions:
1. Higher Uncertainty About Property Prices
Singaporeans are living relatively normal lives compared to much of the world at the moment, but the COVID-19 pandemic has nonetheless brought about a great deal of uncertainty about the global economy, about Singapore’s financial future, and about the future of property prices here.
So, it comes as no surprise that 56% of the people surveyed indicated that the COVID-19 situation had caused higher uncertainty about property prices, which in turn affected their property decisions.
This sentiment was most pronounced in those aged 50 to 59 years, as well as those in the high-income group. This could be due to the fact that a higher-than-average proportion of these two groups are likely to be investors concerned about the effects of the recession on their portfolios.
The number of foreigners fell sharply in 2020, causing Singapore’s population to decline by 0.3%. The foreign population makes up the bulk of the rental market in Singapore, which can in turn affect investors’ rental yield.
As the property market rebounds, Singaporeans’ expectations of future price increases have also risen in 2021, compared to the second half of 2020. The Property Affordability Rating has fallen 5 points from 69 in the second half of 2020 to 64.
The pandemic has unleashed Singapore’s worst recession to date, with the nation’s GDP shrinking a record 5.8% in 2020 and the unemployment rate steadily rising throughout most of 2020. For those whose incomes have been negatively affected, the rebound in property prices is an unwelcome sign that homes could become more out of reach.
2. Difficulty in Viewing Properties
The COVID-19 pandemic has introduced some practical inconveniences in the property viewing process.
41% of the people surveyed reported difficulty in viewing properties. This sentiment was fairly evenly spread across age and income groups, indicating that it affects all buyers, whether investors or would-be owner-occupiers.
During the two-month circuit breaker period, homebuyer were forced to turn to online virtual viewings. This contributed to a steep fall in transactions as buyers tend to be reluctant to commit without being able to inspect a property in person. In addition, certain factors like the amount of noise from traffic cannot be gauged online.
Although physical property viewing has been possible since the circuit breaker ended, safe distancing measures make it more difficult to attend a viewing session. For instance, appointments must be made for viewings at showrooms, and capacity limits apply.
In addition, no more than eight people a day may visit a currently inhabited resale property, including the real estate agent.
Virtual viewings are still an option for those unable to secure an appointment, but consumers understandably prefer seeing a property in person before making a decision.
3. Delay in Completion Dates
The pandemic has disrupted the building and construction industry. All construction and renovation work was forced to stop during the circuit breaker, which has pushed back timelines and may delay Temporary Occupation Permit (TOP) and completion dates for buildings under construction.
Due to construction delays, new condomium projects are likely to have their completion dates pushed back, affecting buyers expecting to pick up their keys in 2021.
34% of the people surveyed cited delay in completion dates as one factor which would affect their property decisions.
This sentiment was most strongly felt amongst respondents who were living with their parents, aged from 22 to 39 years old and in the lower income bracket. The issue is likely to have disproportionately affected young couples who were either newlyweds or about to get married and needed to purchase a home urgently.
Such delays can have a strong impact on the finances and life choices of Singaporeans, who usually move out of their parents’ homes only after the purchase of a first home. In a 2016 poll, 93% of the respondents thought they should own a flat before having a child. Those who wish to start a family may decide to postpone or abandon their plans of having a child altogether if their home is delayed.
In addition, for couples who are temporarily living with in-laws until their new home is ready, delays can mean extending a living situation that is not ideal, especially if there is inter-generational tension in the home. The vast majority of Singaporean households live in HDB flats or condos, which do not allow for a great deal of privacy. Generation and cultural gaps can also make the likelihood of tension within the household more likely.
For those singles and couples who have sought interim accommodation in the form of rental property, any delays in the timeline of their property purchase will prolong their reliance on the rental market and force them to spend more on rent.
Singapore’s property market has been surprisingly resilient in this pandemic and looks set to rebound further in 2021.
Despite an optimistic outlook on the whole, Singaporeans have still been experiencing some anxiety about the future of the property market, difficulties in viewing property and delays in completion date, which might influence their future property decisions.
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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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