Covid-19 aka "Crisis of a Generation": Should I buy or sell now?

How is the Market Situation?

The Straits Times reported on 9 June 2020 that resale transactions for non-landed private homes saw a plunge in sales volumes with 171 transactions in May 2020. This is 80% lower than May 2019 and a 43% decrease compared to the 300 transactions in April 2020.

Prices increased 0.1 per cent compared to April.

The Straits Times reported on 4 June 2020 that Housing Board resale flat volumes dropped in May 2020 to levels not seen in the last thirty years. 364 flats changed hands. This compares to 2019 total resale volume of 23,714 (monthly average 1,976).

Similar to the non-landed private home sector, prices increased 0.1 per cent compared to April.

The reduction in transactions could possibly be due to Circuit Breaker measures preventing physical viewings, or general reduction in consumer confidence resulting in deferral of big-ticket spend.

Recap of 2008 Property Boom

Singapore experienced a property boom in the middle of the recession triggered by the financial crisis. This was widely attributed to a change in investors' perception: an increasing number of people viewed real estate as a safe haven after reports of failures in financial products.

Transact or wait?

Given the possibility for borrowers to defer payments for both home and personal loans, it is unlikely that we will witness a significant fire sale in the near future. Barring exceptional changes in personal circumstances, sellers will likely have the holding power to wait out any temporary price weaknesses.

For buyers, in the short term, the pre-pandemic factors continue to apply: reassess your available budget depending on how your earning power will be affected - affordability is key.

In the long term, I would recommend all participants in the real estate market to scrutinize PM Lee Hsien Loong's 7 June National Broadcast  here. As we face the "crisis of a generation", should real estate continue to be the asset class of choice for wealth preservation/growth? This question would require examination of the drivers of property prices which I will share in a subsequent post here.

Thank you for reading.