Impact of epidemic outbreaks on the Singapore property market | How will it affect your HDB property?
As the COVID-19 outbreak continues into new geographies like South Korea and Italy, equity markets are already starting to buckle under concerns that the virus might develop into a global pandemic. So how will this affect your HDB property, in what was expected to be an exceptional year for Singapore’s public housing market? And what can we learn from past epidemics like the Sars and H1N1 outbreaks?
January new home sales appear unfazed by COVID-19
If the private property market is any indication, then things could be looking up for the HDB market.
For the month of January, new home sales reached a record 618 homes – the best performing January sales figure over the past seven years – owing to the affordable pricing at existing projects and the launch of a few new luxury projects.
Genuine buyers undeterred by COVID-19
At the same time, genuine buyers have continued to visit showrooms and make their property purchases.
According to media reports in February, executive condominium Parc Canberra sold 64% of its 496 units during it launch weekend. At the same time, the larger BTO flats launched in Sembawang were 10 times oversubscribed, while those in Toa Payoh were 7 times oversubscribed. These signal that demand remained strong across most market segments such as private residential, EC market and HDB BTO.
Impact of Sars, H1N1 and COVID-19 on the Singapore economy
Effect of past epidemics on Singapore
The table above provides a summary of the impact seen from past and present epidemics on the Singapore and Global economy.
During the Sars epidemic – which lasted from March 2003 to July 2003 – Singapore’s GDP fell 7% in the first quarter and recovered subsequently. The overall growth rate was 1.1% for the whole of 2003.
With the H1N1 epidemic – from April 2009 to Feb 2010 – there was little impact on the economy, when compared with the global financial crisis (GFC) of 2008.
At present, the COVID-19 epidemic appears to have a smaller impact than both Sars and H1N1 on the property market, according to Christine Sun, head of research and consultancy at OrangeTee & Tie.
“Currently there is no major impact on the property market as it is not one of the sectors that are directly affected by the coronavirus unlike tourism, retail, food and beverage, and Mice (meetings, incentives, conferences and exhibitions)”, said Sun.
Here’s what we know about the historical impact of Sars and H1N1 on the HDB resale and rental market.
Impact of Sars and H1N1 on HDB Resale and Rental market
HDB Resale market
Based on OrangeTee & Tie Research & Consultancy, both the H1N1 and Sars epidemics had little to no impact on HDB resale volume.
During the Sars epidemic, HDB resale volume rose 1.4% while average unit selling prices rose 2.4% over the period of the epidemic. With H1N1, HDB resale volume of standard flats also rose by 20.1% as selling prices increased by 9.5%.
Standard flats exclude adjoined flats, DBSS, improved-maisonette, maisonette, Model A-Maisonette, New Generation, Premium Apartments and Maisonette, Terrence, Type S1&S2.
HDB Rental market
While there is no information available during the Sars epidemic, the H1N1 epidemic did not have an adverse impact on the HDB rental market.
After the H1N1 epidemic, HDB rental volume jumped by 71.1%, as rental prices rose by 9.4%.
OrangeTee & Tie’s view of COVID-19: A temporary impact
While it is not immediately clear how the pandemic will pan out, Sun believes that the effect from COVID-19 appears closer to H1N1 than Sars.
That said, she believes any impact from the COVID-19 epidemic could be temporary, and may not have an adverse impact on the overall property market.
“Singapore has proven time and again that she can remain resilient amid crises, after having emerged strongly from Sars and H1N1. Similarly, many other countries are also more prepared given their experience with Sars. Plus, given the concerted effort by governments around the world to tackle the virus, we can expect some of the major economies to bounce back quickly after this crisis,” said Sun.
That’s not all. The Singapore government has also announced one of the largest relief packages for the current COVID-19 outbreak – specifically a S$4 billion Stabilisation and Support Package – which should help to cushion the impact from this epidemic. This package provides support to workers and enterprises via the Jobs Support Scheme & Corporate Income Tax (CIT) Rebates. Sectors more directly affected by the COVID-19 outbreak can also expect to receive additional support such as Property Tax Rebates, Port Dues Concession, Rental Waivers.
As a comparison, the Sars Relief Package was S$230 million and it provided relief to sectors that were directly and adversely affected by Sars, such as tourism and transport-related sectors.
For H1N1, the government spent S$90 million in 2009 on measures to contain and mitigate the impact of the virus, and then spent another S$84 million in 2010 to build capabilities that guard against potential emergency health situations
OrangeTee & Tie Research & Consultancy maintains its HDB market outlook for 2020
2020 Market Projections for HDB market
To that end, OrangeTee & Tie Research & Consultancy has maintained its market projections for 2020, with rental volumes expected to reach between 48,000 and 51,000 units, potentially achieving another record year.
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