We’re not that far into 2020 yet, but can we just say: What. A. Year.
The Covid-19 situation has thrown a curve ball to practically every sector of the economy, so we wanted to see how Singapore’s property market is faring. We looked at ALL of the resale HDB flats sold so far in 2020, and compiled the median average prices of homes in each neighborhood:
HDB reported that although resale HDB flat prices have been slowly but surely climbing, this time, it has largely remained unchanged from the last quarter (October – December 2019).
But hey, in this crazy Covid-19 period… It’s probably good enough that prices didn’t decline.
Which brings us to the looming question:
Is now a good time to be buying a HDB flat?
Here are a couple of things to consider:
The HDB market was resilient to past epidemics
In the graph below, the folks at OrangeTee & Tie Research Consultancy chart the average HDB resale price from 2001 to 2010, highlighting the SARS outbreak in 2003 and the H1N1 outbreak from 2009 to 2010:
The property market (and more specifically, the HDB market) isn’t one of those sectors that’ll be hit with direct adverse impact of a health crisis.
HDB flat prices will remain stable
Prices of HDB resale flats don’t go through cycles of crazy valleys and peaks. That’s because most people purchase flats for themselves to live in; and while there is potential for profit, it’s primarily for necessary residential use, and not for investment purposes. Which means even in a recession or in a crazy Covid-19-stricken world, prices will still keep relatively stable.
Furthermore, unlike private property, only Singapore Citizens and Permanent Residents are allowed to own HDB flats, so the prices are subject to less global forces of supply and demand. For instance, the border restrictions certainly cut a huge proportion of foreign buyers out from Singapore’s private property sector, whereas this has minimal direct impact on the HDB sector.
More supply of newly MOP-ed HDB flats, although Covid-19 might reverse the effect slightly
Following the ginormous BTO launches from 2012-2015, these very crops of HDB flats will be reaching their 5-year Minimum Occupancy Period (MOP), and a huge number of them will enter the resale market.
And we mean huuuge – about 50,000 HDB flats will be crossing their MOP in 2020 and 2021; in comparison, only about 10,000 flats reached their MOP just 5 years ago in 2015.
Which, for you, means 2 good things: first, more options, and second, the larger supply gives you more negotiating power as a buyer, since sellers face more competition.
That said, the virus might also lower activity in the property market. Some HDB homeowners who initially had the intention to sell their homes might put their plans on hold, for instance, if they’re not comfortable with hosting house viewings during this time.
But your options are still aplenty, and even if you want to ride out the Covid-19 situation before buying your HDB flat, there’s no harm looking around for now either.
Seize a good deal when you see one
Is it the best time to buy a HDB flat? Well, a pandemic isn’t the best time for anything….. But even if the HDB market isn’t doing its best, it definitely isn’t doing badly. See a good deal? Or a place you can totally imagine as your home? Don’t just brush it off just because of the Covid-19 situation.
In any case, before you make any huge property move, do reassess your financial position.
Conventional wisdom says you’re good if you’ve got at least 6 months’ worth of income as a cash reserve. But in this time of uncertainty, and the Covid-19 situation fast-tracking us towards the looming recession, be sure you have contingency plans to service your housing loan in case of any unwelcomed surprises.
If you’re in a good financial position and you had HDB flat-buying plans for 2020 to begin with, don’t let a good deal pass you by. Time to start your home shopping!
