31 Jul Effects of Covid-19 Circuit Breaker and Beyond
Covid-19 Circuit Breaker and the Singapore Property Market
On 3 April 2020, Singapore’s Prime Minister Lee Hsien Loong announced on live TV, the implementation of the Covid-19 Circuit Breaker.
With the exception of people involved in the provision of essential services, everyone had to stay at home for the next 4 weeks starting from 7 April 2020.
When the announcement was made, I was in the midst of a workshop meant for property agents.
Due to popular request, the trainer paused the workshop and everyone’s eyes were glued to the TV.
The main image of this post that you see above, was taken when PM Lee made the announcement.
As PM Lee made his announcement, one of the property agents started frantically making phone calls.
With physical viewing of properties disallowed in the next 4 weeks (& possibly longer), these questions ran through my head:
(a) How would the property market react in the short term?
(b) Will the property market crash or will opportunities surface?
(c) Will anyone transact property since no physical viewing will be allowed?
(d) What is going to happen to the tenants who are either moving out or moving into new rental properties?
(e) Will the government roll back property cooling measures?
And this is how the property market unfolded before me during the first 30 days of the Covid-19 Circuit Breaker.
Consumer Empowerment Webinars – Zoom From Home
⭐ 13 April 2020 // Covid-19 Circuit Breaker Day 7
Before Covid-19 Circuit Breaker, PropNex Singapore (the real estate agency that I am with) used to conduct Consumer Empowerment Seminars at the Toa Payoh Office or in showflats.
On 13 April 2020, it conducted its first-ever (and probably the industry’s first) online Consumer Empowerment Webinar over Zoom.
Conducted every weekday night at 8pm and on Saturday afternoons, the webinars covered a wide range of property-related topics that are of greatest interest to both home-owners and homebuyers amid the Covid-19 pandemic.
These were the topics covered during that 1st week of circuit breaker:
13 April 2020: Witness the 2nd CBD in Singapore. Let’s Ride The Wave of Transformation.
14 April 2020: Identifying Opportunities Amidst Crisis (Mandarin).
15 April 2020: How To Select A Right Unit In A Right Development?
16 April 2020: What Should Be Your Next Move in Today’s Real Estate Market?
17 April 2020: What Might Possibly Happen After 28 Days?
18 April 2020: Are You Doing The Right Thing, Right Now?
Participants who registered and watched the webinars over Zoom, numbered from hundreds to thousands per session.
“I would not have stepped into an actual seminar”
In the weeks that followed, I registered several participants for many different webinars.
One of the participants who is a civil servant, shared the following with me.
As a result of working from home, he found that he had more time in the evenings and did not mind spending his evening to understand more about Singapore’s property market.
He could always exit the webinars if the webinars are not informative.
If not for the Covid-19 Circuit Breaker and Zoom, he confessed he would never attend an actual in-person seminar because he has an innate fear about being asked or pressured to buy things or sign up for courses at seminars.
I think that rings true for many.
The fact that participants could Zoom and attend webinars to learn more about the Singapore property market from the comfort of their home, made them more open to attending such webinars.
The Covid-19 Circuit Breaker effectively triggered more consumers to find out and learn more about Singapore’s property market. Consumers who would otherwise not take the steps to do so.
For this young civil servant, he found the sessions so informative that he roped in 4 more colleagues to watch together – via Zoom from their own home of course.
The data and knowledge shared in these webinars, has benefitted thousands of consumers.
These nightly live webinars are still ongoing at the time of this writing. If you are interested to gain greater insights into Singapore’s property market from the comfort of your home, just drop me a line.
“I would like to sell my flat”
⭐ 16 April 2020 // Covid-19 Circuit Breaker Day 10
What do you do if you want to sell your property even though we are amid the Covid-19 circuit breaker?
Well, one of the evergreen options is to get in touch with a property agent and find out what your options are.
And that was exactly what this property seller did after visiting my website.
After spending 3 days answering the questions that she had and taking the time to understand her situation and sale objective, I was appointed the exclusive agent to market and sell her property.
I had no qualms giving it a go but at the back of my mind, I was not sure if a buyer would buy a resale property without physically viewing it.
But if we do not try, how will we ever know?
Covid-19 Circuit Breaker Extension
⭐ 21 April 2020 // Covid-19 Circuit Breaker Day 15
With the number of unlinked Covid-19 cases not coming down, PM Lee announced that the circuit breaker would be extended to 1 June 2020.
This extension was bound to happen.
Didn’t you think so?
Will buyers buy without viewing?
⭐ 24 April 2020 // Covid-19 Circuit Breaker Day 18
This would turn out to be a historical and memorable day for me.
The resale property that I took on just a few days earlier, was sold to a buyer who decided to proceed based on pictures and video alone.
It was no shabby offer as it was higher than the last done price clocked in March 2020 before the circuit breaker and 14.8% higher than the last offer brought in by the seller’s previous sole agent in December 2019.
So there are serious sellers and genuine buyers out there who will still transact properties even if physical viewing is not possible.
In the days ahead, I would continue to hear news of colleagues successfully transacting both resale properties & new launches (condos under construction).
If you are a serious seller who is realistic about your price expectation, did you do anything during the circuit breaker?
And if you are a genuine buyer, did you make full use of the opportunity to get your dream property while other buyers refused to commit to a purchase without viewing it in person?
Check out my Facebook post where I share a little bit more about my thoughts on closing my 1st ever property sale amid the Covid-19 Circuit Breaker.
Do you know interest rates for mortgage loans are really low now?
⭐ 25 April 2020 // Covid-19 Circuit Breaker Day 19
Do you have an outstanding mortgage loan for the properties you own?
When was the last time you reviewed the amount of interest you are paying?
Citibank warmed the cockles of the homeowners’ hearts with their latest mortgage loan packages on this day 😍
The packages were so attractive that they were oversubscribed by day 2.
Are you aware you could save up to thousands of dollars in interest payment per year just by refinancing your home loan?
When was the last time you reviewed the amount of interest you are paying?
Not sure how to do it? Get in touch with me and I will put you in touch with the mortgage bankers with the best packages.
“I left Singapore. Sorry.”
⭐ 26 April 2020 // Covid-19 Circuit Breaker Day 20
I was already expecting this to happen.
With the economy badly hit by Covid-19, some expatriate tenants would inevitably lose their jobs.
Some will choose to exit properly by paying the required compensation or by searching for a replacement tenant.
And then some will choose to just pack and leave.
Unfortunately, I was involved in a couple of tenancies where the tenants were affected by Covid-19 and the circuit breaker.
But thankfully, I only had one “pack and leave” case to handle while the rest of the tenants negotiated for a proper exit.
Some chose to exit properly by paying the required compensation while others by searching for a replacement tenant.
How do you think the rental market will be impacted in the next 6 to 18 months?
Temporary Relief Measures for The Property Sector
⭐ 6 May 2020 // Covid-19 Circuit Breaker Day 30
The government announced relief measures for the property sector on this day.
These measures included:
(i) Extension of the Project Completion Period (PCP) by 6 months for residential, commercial and industrial development projects;
(ii) Extension of time by 6 months for the commencement and completion of residential development, and sale of housing units in residential development projects in relation to the remission of the Additional Buyer’s Stamp Duty (ABSD) for housing developers;
(iii) Extension of the PCP and/or disposal period by up to a total of 6 months for residential development projects under the Qualifying Certificate (QC) regime for foreign housing developers; and
(iv) Extension of time by 6 months for the sale of the first residential property in relation to the remission of ABSD for the second residential property purchased by a Singaporean married couple.
Please see the details by visiting this MND page.
And this concludes the 1st part of this post where I touched on the major incidents that happened to me or in Singapore’s property market during the 1st 30 days of Covid-19 Circuit Breaker.
Let us now move on to the 2nd part – the transaction data for Singapore properties between April 2020 and July 2020.
How did the property market perform from April 2020 to July 2020?
Let’s have a look at the transaction data below.
P.S. July 2020’s transaction data is incomplete at the point of writing.
a. Monthly Resale HDB Transaction Volume & Value
Transaction volume plunged in April 2020 (420 units) & May 2020 (361 units) as the ban on physical viewing took its toll.
But the figures for June 2020 surged to 2,441 transactions as Covid-19 phase 2 re-opening started on 19 June 2020.
The Boon Tiong area had 2 notable transactions between April 2020 and June 2020.
(a) The highest transacted PSF in May 2020 was for a Boon Tiong HDB 3-room flat that sold for $988psf ($660k).
(b) The highest sale price achieved in May 2020 was for a Boon Tiong 5-room flat which was sold for $1.14m ($945psf).
Have you been following the HDB market? Do you know the underlying factors driving prices up / down in the HDB market?
b. Monthly Resale Condo Transaction Volume & Value
Resale condo transaction volume plunged to a low of 154 units in May 2020. Since then, the transaction volume has picked up in June 2020 and July 2020.
Notable resale condo transactions between April 2020 and July 2020:
(a) Out of the 3 units at The Orchard Residences that changed hands, 1 of them was sold for $9.68m or $3,393psf. This transaction resulted in a loss of more than $3m for the seller who had owned the unit for 13 years.
(b) 7 units at High Park Residences changed hands. Over the holding period of 4+ years, the sale netted the 7 sellers a profit of between $57k to $337k each. The percentage increase in their sale price vs the price they bought ranged from 9.6% to 29.38%.
What kind of units do you think sold for the highest % gain?
What kind of units do you think sold for the highest absolute profit?
(c) 1 of the units at The Centris was sold for a profit of $565k after a holding period of 12 years. The transacted price is 86.92% higher than the price the seller paid for.
Food for thought: On paper, making $337k over a period of 4+ years seems like a better choice over making $565k in 12 years.
But what if The Centris owner managed to rent out his unit for at least 8 years (excluding the construction period)? For your information, High Park Construction took about 3 years. Would your decision be different?
P.S. In computing the gains or losses, I deducted the seller’s original purchase price from the price he sold without taking into consideration expenses such as stamp duties or the agent’s commission.
c. Monthly Resale Landed Transaction Volume & Value
Transaction volume in the landed segment pretty much mirrored those we saw in the HDB and resale condo segments.
Notable resale landed transactions between April 2020 and July 2020:
(a) 3 landed houses were sold for more than $10m each.
(b) The highest PSF achieved during this period was $4,371psf for a conservation terrace house in the Emerald Hill area.
(c) The lowest sale price achieved was $1.425m for a 99 years leasehold terrace house at Loyang Villas.
Unlike HDB flats and condos, do you know that there are a lot more factors that can affect the value of a landed property?
d. Monthly New Homes (Condo) Transaction Volume & Value
The transaction volume in the new homes segment looks fairly healthy vs the numbers done for the previous months.
Having said that, if you look beyond the numbers, the bulk of the transactions are concentrated around a few new launches that are very well received by buyers.
These are the top 5 selling new homes in Singapore from April 2020 to July 2020.
Have you been following the new homes segment in Singapore?
Have you thought about this – what is the allure of buying new homes that are typically more expensive than resale properties and have smaller floor areas?
Property Market Crash?
Unlike what we saw during the Asian Financial Crisis and the Global Financial Crisis, Singapore’s property market has been fairly resilient thus far.
There is no big plunge in prices like what we witnessed in the past. Or at least not yet.
One of the main reasons is due to the slew of property cooling measures introduced by the Singapore government over the last 10 years or so.
These cooling measures have effectively kept speculators out of Singapore’s property market – which explains why the property market is fairly stable.
The buyers who have bought in recent years would have bought with very strong financial footing (think TDSR, ABSD, loan to value) and were prepared to hold on to the property for at least 3 to 4 years (SSD).
Having said that, let’s see how the rest of this year pans out.