It’s been well over a month since the circuit breaker measures kicked in, and things have been challenging for everyone, including those in the property sector.
Obviously, the economic impact of COVID-19 has made it more difficult for people to buy, sell and rent their properties, but the good news is that there are still activities happening, albeit at a slower pace. So if you’re on the lookout, there are still ways to go around it.
We’ve already covered why buying a property makes sense during the COVID-19 period, so today we would like to address the selling of properties.
The impact of COVID-19 on property sales
Both the COVID-19 and the circuit breaker restrictions have obviously impacted the property sector. Sale galleries are no longer open to the public, while the economic impact of COVID-19 has diffused buyers demand for new properties.
According to the latest URA Q1 2020 data, developers sold 2,149 new homes (excluding executive condos) in Q1 2020, 12% lower compared to the 2,443 units sold in Q4 2019. Home sales also fell by 32.4% in March.
Meanwhile, data from the HDB also showed that resale flat transactions fell by 7% in Q1 2020.
Commenting on the data, Tan Tee Khoon, Country Manager for PropertyGuru Singapore said: “The drop in HDB resale volume is expected in view of the CNY festive period which spilt over to February (which was already a shorter month) from January and the gradually stricter movement control restrictions in place in the second half of March 2020. Resale flat prices continued to be resilient nonetheless due to the favourable grant enhancements and CPF policy tweaks announced last year. That continued to impact sales in the 1Q 2020
“Meanwhile, the drop in private property prices reflects the weaker sentiment in the market due to economic headwinds and COVID-19 concerns which became more pertinent especially towards mid-March as well as the overhang of 35,000 unsold homes”.
The PropertyGuru Property Market Index Q2 2020 report revealed that asking prices in the non-landed private residential sector have continued to fall for the third successive quarter. However, The significantly higher number of listings found on PropertyGuru this quarter signals higher downside price pressure and is likely to continue for another quarter, as Q2 2020 bears the brunt of at least two months of circuit breakers.
The limited impact on property prices as of end March 2020 could be attributed to sound fundamentals and quiet confidence across the general population in how the Singapore government is managing the COVID-19 situation.
How the property market has adapted to keep buyers and sellers safe
As mentioned above, the strict social distancing measures have limited people’s ability to socialise and mingle around. Property viewings are also no longer allowed.
But developers, agents, as well as resale property sellers, have adapted to the situation with the help of technology and virtual tours.
“There is no restriction to selling during the extended circuit breaker period though there would be no physical viewings and interactions between sellers, agents and prospective buyers”, says Tee Khoon.
“Viewings can be conducted online or through virtual tours or videos already filmed before the circuit breaker period. Any negotiations can also take place via Zoom calls or emails.
“Sellers of resale properties who are tech-savvy can do so or they can do so through agents whom they appoint to sell their properties who have filmed videos or virtual tours on their properties already”.
Thankfully, all the paperwork and key documents that are needed during the buying-selling-renting process can still be done safely and securely, without the need to meet up.
Tee Khoon added: “The Option to Purchase can still be signed and exchanged with the option fee cheque through courier services. Lawyers are still available when options are exercised and the option exercise dates can also be scheduled to after 1 June 2020 when the extended circuit breaker period is lifted.
But is this a good time for property sellers to sell property?
While some buyers might weight on capitalising on the lower interest rate and the good selection of properties available now, but what of selling? Is it a smart move to sell your property now? Should we expect a lot of fire sales to happen?
Tee Khoon doesn’t expect many sellers to list their properties for sale for now as property prices are now lower. However, he says that buyers are always on the lookout for good deals, so sellers who are willing to let go of their properties at a good deal will always attract buyers.
“The main consideration for the sellers would be whether they are able to obtain their expected selling price or whether if they’re willing to give a steep discount.
“But most sellers are likely to wait out this period before putting their properties for sale to ride a so-called pent up demand than to sell short of their expected prices now. As for buyers, they are always hunting for a good deal during the pandemic and there will be those motivated sellers who would wish to relinquish their properties in the shortest possible time.
The latest findings in the PropertyGuru Property Market Index Q2 2020 report predicts that “there are will always be business owners and investors that are willing to liquidate to stay afloat”.
“Agents whom PropertyGuru’s Research Team spoke to, indicate that many have received interest from their existing clients to scout for ‘good deals’ as the situation unfolds. Many are willing to enter the market if they were offered a deal with good risk premiums, and hold through the recovery, as they have seen how property prices have rebounded back consistently in the past”, says the report.
But should a buyer who is on a lookout for good deals, choose to buy a resale property, given that there are some sellers who are willing to sell at a lower price, or wait for developers to let go their properties at lower prices, with ABSD deadlines on their minds?
Tee Khoon thinks that the driver to this question largely depends on what buyers want. While some developers might offer discounts, he doesn’t expect them to be huge given that there’s still some time left for developers before the ABSD deadline approaches.
“It really depends on the urgency for accommodation or an objective like buying near a choice primary school if they have children. There may be preferred locations of buyers which don’t have new launches. And of course, price, as it is about affordability too
“Most developers don’t have immediate ABSD deadlines anyway; more will face it from 2022. So developers aren’t in a rush to sell and developers are unlikely to drop prices drastically. Some discounts yes, but I don’t foresee huge price drops, at least not now”.
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