While it may be in its early stages, the COVID-19 outbreak could have a significant impact on the economy. The most vulnerable sectors, specifically the tourism-related sectors, such as hotels and airlines, will likely suffer the hardest blow. Minister for National Development Lawrence Wong has announced that Singapore is temporarily closing its doors to all Chinese passport holders for tourism purposes. This is in line with that of the World Health Organization (WHO) that officially declared the epidemic as a world public health emergency.
Short-term and multiple-visit visas and visa-free transit for Chinese passport holders, in the meantime, are suspended. And to further minimise the risk of community spread of the virus, new visitors of any nationality with recent travel history to mainland China will not be allowed to enter Singapore.
All new work pass applications for foreign workers from mainland China are being rejected by the Ministry of Manpower (MOM) until further notice.
Considering the latest wave of entry restrictions, how will it impact Singapore’s property sector?
Impact of COVID-19 Outbreak on the Property Sector
1. HDB Sales Market
HDB has strict eligibility criteria in order to qualify for a subsidised flat. Will the current restrictions affect the HDB sales market?
When asked about the possible repercussions, Ohmyhome’s HDB Sales Manager Clarence Liang said, “I believe that the HDB resale segment will likely remain stable because these involve genuine home buyers rather than investors. While we might see a temporary effect in a few weeks because people are staying vigilant and reducing social contact, the general public confidence should be restored very quickly and then it will be business as usual, as long as the virus situation does not escalate.”
2. HDB Rental Market
Manpower Minister Josephine Teo said that about 30,000 work pass holders from China are yet to return after Chinese New Year break. Fortunately, this only makes up less than 1% of the workforce.
The number of tenants who are currently staying in HDB flats is likely to be stable since tenant eviction is unnecessary. The government said in a joint press release that landlords found to have irresponsibly evicted their residents may face restrictions and even be barred from renting out their flats to foreign work pass holders in future.
Over time, the HDB rental may see a slight decline if there is no new influx of Chinese work pass holders in view of the suspension of the issuance of new work passes to PRC passport holders.
3. Private Property Market
How will this outbreak affect the private property market?
“Over the next few quarters, we might see a bigger impact on the home sales within the Core Central Region (CCR) since at least 30% to 40% of the home sales transacted in 2019 were made up of Chinese nationals,” said Ohmyhome’s Private Property Sales Manager, Louis Tay.
“Compared with the SARS period from 2002 to 2003, we are better prepared as a nation. I am optimistic that we are ready for what is coming, developers and genuine home sellers will also be reasonable in pricing their properties right. There will be some investors or homebuyers who will pounce on opportunities like this.”
4. Destination Services Sector
Non-residents in Singapore – which include dependants, international students and people working in the country – add up to 1.68 million as of 2019. This demographic contributes to the property rental and relocation services sector.
Ohmyhome’s Director of Real Estate & Destination Services, Darren Teo said, “As we are still in the early stages of the COVID-19, the full impact of its damage is still far from being felt now. But as moves are postponed and relocation activities slow down, it is certain that in the coming months, you can find some good deals in the temporary and permanent accommodation market.”
The WHO raised COVID-19 alert to highest level after cases found in nearly 50 countries. Across the globe, particularly in China, the number of cases is still increasing. Nevertheless, we must never lose hope in combating this global emergency. Stay safe and don’t forget to take care of your family’s health by powering up your body’s natural defence.