Private residential market in Singapore to strongly recover from economic downturn

Based on historical archives, the market sector is usually fast to recoup after crisis

Front view of a traditional vintage shop house in Singapore, with red, blue and yellow wooden shutters. JustinAdamLee/Shutterstock

Since Singapore authorities enforced circuit breaker measures to curb the spread of the virus, activities within the real estate market have halted, said the head of research and consultancy at OrangeTee & Tie and contributor at Channel News Asia Christine Sun.

Potential buyers had to resort to virtual tours as they were not allowed to physically view houses and show flats due to social distancing protocols. However, online tactics weren’t enough to maintain the market’s strong numbers.

Data from urban Redevelopment Authority revealed that the total price index of private homes dropped one percent quarter-on-quarter in the first quarter of this year, after growing for three consecutive quarters. Fortunately, the slump is not as bad as the primary price drops that were seen in previous crises.

Christine explained that the descent of the market price will vary on the duration of the pandemic, as well as other considerations, including the financial health of homeowners and the unemployment rate.

“As of now, we have not seen significant numbers of homeowners defaulting on mortgages, likely because of several past cooling measures such as the TDSR (Total Debt Servicing Ratio) and Mortgage Servicing Ratio (MSR). These instil financial prudence in buyers by capping a borrower’s gross monthly income used to service their housing loans,” she added.

On the other hand, she said that the limitations aren’t applicable to principal and interest for deferred mortgage payments since this was part of the government’s stimulus plan to offer relief to homeowners amid the outbreak.

More: Singapore offers legal protection to financially distressed property buyers

As for the state of the market, Christine said that the fundamentals, such as political stability, safety, transparency and the ease of doing business, that has enticed foreign investors to the city-state will still remain strong post-pandemic.

Moreover, she argued that the track record of the private property segment in swiftly overcoming past economic crises is an indication of what’s to come.

In the past three decades, private properties have normally generated positive capital appreciation. The property prices have increased all throughout the market segments and have overcome severe crises, including the global financial crisis, the Asian financial crisis and SARS, according to URA’s price index.

“Singapore will continue to be a top investment destination and a safe haven for investors,” concluded Christine.

Seeing as this insight can definitely benefit the real estate market, particularly the private residential segment, several developers have already improved their virtual marketing strategies to win investors over.

The regional winners of the 14th PropertyGuru Asia Property Awards Grand Final, namely UOL Group, Bukit Sembawang Estates, Oxley Holdings, TSKY Balmoral, Arum Land, Sing-Haiyi Gold, Qingjian Realty (Marymount), Chong Kuo Development and GuocoLand Singapore are just some of the developers who have gone digital, confidently armed with the market’s positive forecast.

Know of any award-worthy real estate projects in Singapore? Nominate them for the 10th Asia Property Awards (Singapore) by 31 July 2020. Simply visit asiapropertyawards.com/en/award/asia-property-awards-singapore for more details.

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