How Real Estate Trends From Singapore’s Last Recession Could Inform Property Predictions In 2020

PropertyGuru Editorial Team
How Real Estate Trends From Singapore’s Last Recession Could Inform Property Predictions In 2020
Recent government data showed that Singapore’s economy is at its weakest since the 2008 global financial crisis.
Earlier this year, Finance Minister Heng Swee Kiat painted a grim scenario in Parliament during his Budget 2020 speech on February 18.
“Singapore’s economy grew by a modest 0.7 per cent in 2019. This is the weakest growth since the 2008 Financial Crisis. Just as the global economy was beginning to recover, COVID-19 hit us. The outbreak will certainly impact our economy,” he said.
Echoing a similar sentiment, Prime Minister Lee Hsien Loong on March 14 warned that COVID-19 could be even worse and will have a prolonged impact on the economy.
“The economic hit will likely be more serious than the global financial crisis, and longer-lasting too, even beyond the end of the pandemic,” he said in a Facebook post.
Already, Singapore’s tourism, aviation, hotel, F&B and MICE industries have taken a beating due to the ongoing travel restrictions.
Some are expecting to get even worse after the Circuit Breaker period.
For the duration of 7 April until 1 June, the Circuit Breaker period, only essential services are to operate from which will see a knock-off effect on the property market that is very much sentiment-driven.
The previous global financial crisis which occurred in 2008, for example, sent the Singapore economy into a tailspin before rebounding quickly in 2009.
With a looming recession and amid COVID-19 outbreak, here are the likely scenarios that we might see unfold in the property market, if history were to repeat itself:

No panic selling

A glance at the transaction data during this period showed that Singapore’s real estate market remained resilient.
According to PropertyGuru, there were a total of 7,078 condominiums that were sold at a median price of S$774.50 per sq ft in 2008.
In comparison, there were a total of 21,924 similar transactions at a median price of S$820.25 per sq ft in 2007.
On a year-to-year basis, this represented a decline of 67.72 per cent in transactions with a decrease of 5.57 per cent in its median price per sq ft.
So while prices did fall, transactions were fewer suggesting that owners had holding power.
On a quarter-to-quarter basis, 2008’s data showed that transactions peaked in the third quarter to 2,653 from 1,644 and 1,897 units in the first and second quarter respectively as the crisis deepened.
Meanwhile, prices fell to a median price of S$768 per sq ft in the third quarter from S$907 per sq ft during the same period in 2007, representing a year-on-year decline of 15.33 per cent.
Most significantly, the second quarter of 2008 (1,897 units) showed the steepest decline in transactions at 76.72 per cent year-on-year from 8,149 units that were recorded in the same period in 2007.
Market exuberance returned in 2009 with a total 20,040 units that were transacted at a median price of S$786.75 per sq ft.
On a year-to-year basis, this represented an 83.13 per cent increase in transactions at an increase of 1.58 per cent in its median per sq ft.
Also, the number of transactions peaked at 204.39 per cent year-on-year from 1,845 units sold in the first quarter of 2009 to 5,616 during the same period in 2010.
Meanwhile, the median transacted price increased 49.78 per cent during the same period from S$625 per sq ft to S$936 per sq ft.

Lessons learnt: The market recovered quickly and delivered consistent value as market confidence returned.

Pockets of growth have always existed

A look at PropertyGuru’s districts’ data showed that despite the recession, pockets of growth do exist.
For example, while prices of condominiums located in the prime areas of Boat Quay/ Raffles Place declined the most in the second quarter of 2008 at 13.42 per cent, those that are located in the suburbs did relatively well.
Admiralty/Woodlands and Eunos/Geylang/Paya Lebar, in particular, showed an average price increase of 3.8 per cent and 3.16 per cent respectively during the same period.
For example, the average transacted price in Admiralty/Woodlands increased from S$541 per sq ft in the third quarter to S$590 per sq ft in the fourth quarter of 2008.
Likewise, the average transacted price in Eunos/Geylang/Paya Lebar increased from S$683 per sq ft to S$959 per sq ft during the same period.
This was a whopping price increase of 40.41 per cent and the best performing area in Singapore quarter-on-quarter.
Followed this were Boon Lay / Jurong / Tuas and Sembawang / Yishun at 1.48 per cent and 0.31 per cent increase respectively.
Meanwhile, the rest of Singapore recorded negative growths.
In addition, PropertyGuru’s data showed that Yishun and Woodlands staged a quick rebound post the financial crisis in 2009.
For example, Admiralty / Woodlands showed a sharp increase of 9.6 per cent in its median transacted price from S$534 per sq ft in the second quarter to S$594 per sq ft in the third quarter of 2009.
Likewise, Sembawang/Yishun recorded a price increase of 11.83 per cent in its median transacted price from S$465 per sq ft to S$530 per sq ft during the same period.

Lesson learnt: The Outside Central Region (OCR) bucked the trend during an economic crisis

Figure_1 (1)

Median prices recovered in less than a year

Interestingly, PropertyGuru’s data also showed that the median prices of condominiums island wide started to recover year-on-year in the third quarter of 2009 before peaking in the first quarter of 2010.
For example, the median price rebounded from S$768 per sq ft in the third quarter of 2008 to S$867 per sq ft during the same period in 2009.
It peaked to a whopping 49.6 per cent increase in the first quarter of 2010 from S$625 per sq ft in the first quarter of 2009 to S$936 per sq ft during the same period in 2010.
On a district level, the best five performing districts according to data tracked from the first quarter of 2008 to the fourth quarter of 2010 were:
  1. Seletar / Yio Chu Kang: (61.54 per cent increase)
  2. Boat Quay / Raffles Place: (52.7 per cent increase)
  3. Sembawang / Yishun: (35.53 per cent increase)
  4. Orchard Road / River Valley: (31.15 per cent increase)
  5. Eunos / Geylang / Paya Lebar: (30.41 per cent increase)
Meanwhile, the worst-performing districts were:
  1. Harbourfront / Telok Blangah: (20.19 per cent decrease)
  2. Admiralty / Woodlands: (12.35 per cent increase)
  3. Tanglin / Holland: (13.45 per cent increase)
  4. Ang Mo Kio / Bishan / Thomson: (13.79 per cent increase)
  5. Bedok / Upper East Coast: (13.89 per cent increase)
Figure_2 (1)
It is worth noting that only Harbourfront / Telok Blangah registered negative growth as it encompasses Sentosa Cove.
This enclave is particularly volatile during an economic downturn as properties here are out of reach, explaining why the district registered a price decline.
Meanwhile, mass-market condominiums will remain resilient as they are generally dominated by local buyers and affordably priced.

Lesson learnt: Based on this historical trend, we can expect condominiums in the prime areas on the main island Singapore to recover first followed by the rest as these areas are favoured by high net worth local and foreign buyers.

Buying will continue

Based on the lessons learnt during the 2008 crisis, there are savvy investment opportunities that arise despite the bleak market outlook.
As the above chart suggests, high-end condominiums located in the Boat Quay /Raffles Place district registered a 52.7 per cent increase in its median transacted price from S$1,658 per sq ft in 2008 to S$2,531.75 per sq ft in 2010.
One good example of this is The Sail at Marina Bay which saw many investors flipping their units for a handsome profit.
As the above figures show, the market is cyclical – what goes down will eventually come up.

Lesson learnt: The bounce-back has always been momentous as Singapore is seen as a safe haven and a blue-chip investment destination.


Singapore’s efficient government, political stability, and competitive economy has helped the nation recover quickly from challenges in the past.
The resilience of the Singaporean community will be sure to have a positive impact on the economic recovery from COVID-19 and other challenges in the years to come.
At PropertyGuru, we believe that every person – no matter what their circumstance – should have a place to call home, we are canvassing support from kind-hearted individuals and organisations to help our fellowmen and women in need, across the region.
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This article was written by Khalil Adis.
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