The Covid-19 pandemic has been a hard-hit for many industries all over the world. Singapore has also faced similar issues regarding its financial stability of the local economy. Property investment in Singapore has always been one the attractions for many foreign and local investors. Singapore’s prime real estate market has proved to be rather lucrative over the years. Many businessmen want to buy property in Singapore so much so that the prices of homes have increased to the point where the government has to step in. In that case, there have been cooling measures put in place to stabilize property prices and make sure they are affordable enough for locals to live in. Therefore, has Covid-19 changed the way investors see the property market in Singapore?
Initially it was quite an abrupt reaction. Many buyers want to wait to see how Covid-19 will affect local and international markets. However, when it comes to property in Singapore, whether it is a resale or newly launched, it will still attract investors if priced correctly. Good location is another factor that affects whether or not individuals will buy property in Singapore. The reason for the constant interest of property investment is due to the market still having a good influx of cash liquidity. Asians love to invest in property, and especially to buy property in Singapore. It could either be to upgrade, earn or keep for legacy purposes. In this article, we will talk about how property investment has been affected due to the Covid-19 pandemic.
Viewings are now conducted over video conferencing via applications such as Zoom or Skype. When foreigners or locals want to buy property in Singapore, the viewing is probably the most crucial part of the process. However, due to social distancing measures and remote work, most agents are using technology to conduct virtual viewings and tours. This may not be as convincing as an in-real-life showroom presentation. However, there have been successful investments made through virtual viewings. Property investors seemed to get hooked onto a home and it helps them make faster decisions. They can inspect the property in person once safe distancing measures have cooled down.
It is no surprise that valuations are more difficult to retrieve now more than ever. This can be a challenge when investors are considering to buy property in Singapore. Reason why is that all resale properties need a proper valuation report in order to secure loans. This is specifically essential for older properties that need new valuation reports as most of their existing valuations are outdated. Banks will not be able to work out how much they can lend you without the valuation of an older property. However, for the more positive side of things, valuation reports are not necessarily needed to buy property in Singapore if it is for new condo development (including BTO flats from HDB). In cases like these, banks will accept the developer’s price to be a fair value.
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Due to the circuit measures that were put in place earlier this year, all construction activities have been fairly delayed. There are also many projects facing supply shocks. This is due to the closed borders. There are certain materials required from Johor Bahru, however they will not be able to come through during lockdowns. There has also been a shortage of Labour. Many construction workers were not allowed back in Singapore if they were visiting China during the Covid-19 outbreak. Singapore’s Covid-19 infections had risen dramatically due to cases of foreign workers staying in dormitories. This will surely impact the supply once construction projects start up again. However, even if these factors will dampen and restrict the progress for property developments, they have not pulled down the property market in Singapore. Construction delays should not affect your decision when you want to buy property in Singapore.
The Singapore government has rolled out 3 types of contingency strategies to help the property market pull through during the pandemic. These plans consist of the Singapore budget, developer’s action and ABSD tax. The Singapore budget has helped with factors such as deferred repayments of property loans, borrowers refinancing without TDSR, property tax rebates for non-residential properties, extended time of disposal, and rental costs. Developers will be cutting back prices by almost half for upcoming properties. Therefore it is more likely that the developers will lower the selling prices for newly launched properties. This is what will get more foreigners interested to buy property in Singapore. As for the ABSD tax, it has been seen fit to ease the 5 year ABSD timeline for building and selling projects.
If you plan to buy property in Singapore during the pandemic period, it will be good to do your research first. Look out for affordable housing at good locations. That is what is mostly highly appreciated in Singapore’s property market. Want to know more about property market trends and investing? Read all about it on our blog at SRX Property.