When the Pandemic Ends, Here Is What Will Happen to Property Prices

PropertyGuru Editorial Team
When the Pandemic Ends, Here Is What Will Happen to Property Prices
How will COVID-19 impact the real estate market in Singapore? Should I even consider buying property now when I am worried about my job and income? What will the property market look like after?
If these are questions that you are battling with, then we will show you the different ways the property market could recover post-pandemic.

What will the recovery look like?

“One of the key issues people are worried about is once everything has settled, what will happen next?”
We spoke to Dr Nai Jia Lee, Deputy Director, National University of Singapore, Institute of Real Estate and Urban Studies, to find out the different ways our property market could recover over the next few months. And here’s what he had to say:
The Singapore property market could see a V, U or L shaped recovery. There are many past instances, where recovery followed these trends, followed by global crises or unprecedented health crises like the one the world is experiencing currently.

What does a V-shape property recovery look like?

Described as the ‘classic’ economy shock, the market could see a V-shape recovery post-COVID-19.
This recovery was last observed during the global financial crisis in 2009.
During a V-shaped recovery, property prices recover quickly due to certain growth clusters that saw an exponential increase. According to Dr. Lee, last time around Singapore witnessed this recovery thanks to overseas Chinese buyers who bought property here and boosted economic growth.

What would happen to property prices during an L-Shape recovery?

During an L-shape recovery, property prices will stay largely stable. There will be minor fluctuations of -3% to 3% in a year and this will last for more than two years. We witnessed such a period from 2002 to 2005.

What could an L- Shape comeback mean for property prices?

An L-Shape recovery is usually observed during “periods of stability’. This was seen in the years following 2001 (and the subsequent 9/11 attack), after global events such as the SARS epidemic and the Gulf War.
The L-Shape reflected the lack of diversity in Singapore’s overall economy and its heavy reliance on the U.S

U- Shape recovery and its impact on property prices

This route usually takes more time due to underlying reasons causing the market to drag for an extended period before recovering, creating this distinctive U-shape.
In Singapore, these trends played out during the market in 2013, post-TSDR implementation. Demand was curbed by ABSD and that saw a delayed bounce back to previous prices.
In a U-shape recovery, the pick up in prices is slow in the initial recovery (ranging from 0-1% per quarter) before it speeds up to around the subsequent months (at 2-4% per quarter). The whole recovery can take place within a year, especially if the market is flushed with capital and favourable credit conditions.

Do falling prices of property make it a good time to buy?

Currently, the URA Price Index shows that prices continue to be high, but an estimated 10% price drop will set the market back to its previous low, as seen during the TDSR implementation.
“It’s easy to say, ‘Buy Low, Sell High’, but when (prices) are low, we don’t see people buying"
The other reason for this could be that ‘good properties are unavailable’ when things are not going well and incomes take a hit. This is largely due to the ‘loss aversion attitude’, which sees sellers scrambling to protect their own interests.
However, Dr Lee believes that there is a possibility of some of these ‘good properties’ coming back into the market. However, the reason for that may not necessarily be the pandemic, but other issues (albeit interrelated) such as the drop in oil prices.

How far will property prices fall?

There is likely to be a correlation between the drop in prices to the number of active COVID-19 cases both locally and globally.
“If the number of cases begin to drop and circuit breaker measures are relaxed, the extent of the decrease will ease due to the opening of the economy”
No panic selling was observed during the last recession because the property market recovered quickly and delivered consistent value as market confidence returned. ​
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, 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 still had holding power post-recession.
So in short, if the number of cases for COVID-19 continue to go up (locally and globally), there could be further price drops. However, if we get on the road to recovery sooner, prices will stabilise.

During the pandemic, should I focus on the location of the property or the timing?

“The question of location or timing depends heavily on the buyer’s intention”
Property investors, Dr. Lee said, consider not only the sales volumes and price indices, but also the state of the stock market.
Although, he observes there are people who find ‘other assets more attractive’ and are trying to sell their properties.
Looking at our Property Market Index Q2 2020, the supply of new sales and resales in certain areas is a key thing to consider when looking at investment location.
According to the past recession, pockets of growth have always existed – the Outside Central Region (OCR) bucked the trend during Q1 2008 – Q4 2010.
Based on this historical trend, we can expect condominiums in Core Central Region / prime areas to recover first, followed by the rest of the island as these regions are favoured by High Net Worth locals and foreign buyers.
The bounce-back from any economic crisis has always been momentous as Singapore is seen as a safe haven and a blue-chip investment destination.
Last week, PropertyGuru held a webinar discussing "Singapore Property Market in 2020 – Buy, Sell or Wait?" to get expert opinions on the current state of the property market. Our panelists, Dr Tan Tee Khoon (Singapore Country Manager, PropertyGuru), Winston Lee (Director of Special Project, Property Guru) and Dr Nai Jia Lee (Deputy Director, National University of Singapore, Institute of Real Estate and Urban Studies) discussed how the road to recovery will look like and where are the opportunities for property investment.
If you missed our live webinar, you can watch the recording here.
For more property news, content and resources, check out PropertyGuru’s guides section.
Need help financing your latest property purchase? Let the mortgage experts at PropertyGuru Finance help you find the best deals.
Eugenia Rosaline Shlaen at PropertyGuru wrote this story. To contact her about this or other stories, email
Disclaimer: The information is provided for general information only. PropertyGuru Pte Ltd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.