What if Covid19 is here to stay?
Updated: May 27, 2020
What If Covid19 is not going to go away? What if, even with the vaccines and cure, Covid19 will still be around? What can happen to us, and in particular to our property market? Below is my Vlog. If you like to read my blog, pleas scroll down further :)
As I am writing this, we are coming to the end of the 2 months circuit breaker in Singapore. Much has happened to the world. Governments, health experts, WHO and many pharmaceutical companies are in the process of developing the vaccines and cure, with some already started human trials. Some may be ready with the vaccines by end of 2020. We are witnessing the unprecedented development of vaccines in record time. We pray and hope that the vaccines and cure are ready soon so our lives and economy can be back normal again.
But, having said that, the question that all of us doesn't want to ask is: What if Covid19 is here to stay? Or what if the virus is here to stay even with vaccine and cure? There are viruses, bacterial and diseases that have been a part of the human race for a long time. Some don't have a cure or vaccine, and we have learnt to adapt and live with it. I am no human behavior expert nor do I possess any phd in economy or related field, but observing from a layman's and a realtor's point of view, and from the past epidemics that happened, in my opinion, if Covid19 is here to stay, I find that we would go through these 3 simple stages in relation to the property market.
Reaction & Respond
What can happen within the first 6 to 9 months of a new outbreak of virus and disease?
Buy lots of toilet papers? No please. No panic buy.
Government, health experts and WHO will try to isolate and contain the spread within the locality or country. Many measures will be enforced to control the spread of the virus, but will affect our daily lives in significant ways. All of us will have to adhere to the measures and make temporary changes. Many unwanted behaviors and events can happen, like panic buy to stock up food and necessities, job loss, bankruptcy, stock market crash, no economic growth, etc.
During the same time, Government, WHO and pharmaceutical companies will rush to develop cure and vaccine.
It is during such time, some actually find opportunities to make money and many who have ready funds may come out shopping while most people are at home.
Queuing to buy new launch condo in March 2020
Some may look for good value stocks to buy, some may go for gold, and many could move their funds to property. During such time, transaction volume for properties may be affected because most of us would probably choose the wait and see attitude. But you could still see a good number of sales transactions happening while everyone is panic buying toilet papers. Prices may not necessarily dip significantly, or may not even drop.
I believe to many investors, real estate, in a stable country like Singapore, is almost an inflation-hedge and recession-proof assets that makes it very attractive. If you select a good location, with strong demand and limited supply property, and you have funds to purchase a property, buying during such time may likely increase the chance of appreciating your assets in the near future. No wonder we are seeing many rich buying properties in Singapore in recent times.
One thing I am sure is people cannot be staying indoor forever and the Governments cannot keep their countries in lock down and close for a prolong time. We will find a way to live our pre-virus lives and accepting the virus is here among us. After more than 9 to 12 months of outbreak, very likely there could be vaccine or cure ready, or the population has reached herd immunity, or we may just have to live life differently.
We are all social being, and I am certain man-kind will adapt to want to socialize, interact and meet with each other again. Companies will want to adapt to survive and make money. Government will adapt, probably changing their policies for the betterment of lives in the country and GDP growth. As I am writing this, many corporations like the airliners, the holiday cruise companies, countries like Thailand, are getting ready, adapting, making necessary changes to their operations to make a come back. I was watching a CNA interview with a professor from Australia about post-pandemic economy on 25 May morning, he mentioned that the cruise liners' bookings for 2021 are already higher than 2019.
When that happen, the economy, although may take time, will pick up once again. Social events could take place again, like weddings, conferences, exhibitions and even holiday traveling. People will start buying more basic necessities, desired items, services, luxury goods and even properties.
Many who waited to see how does the virus situation play out, may possibly be coming out to look for property. Who might they be?
The newly wed young couples, the upgraders, the investors, the retirees, etc. Most of these buyers are looking to buy more as a need and necessity. The need to own a home for the young couple. The need to have a bigger space for the growing children in the families. The need to stay in the right size properties for the retirees living their sunset years. The investors will always be looking for good opportunities. In Singapore, majority of all private non-landed transactions are Singaporeans, follow by Singapore PR and foreigners. In 2019, more than 75% of all sales transaction involved Singaporean buyers. The need and demand for properties are real in Singapore, and I am not surprise transaction volume may still grow at this stage. By now, those who bought properties at the beginning stage of the outbreak may probably be experiencing paper gain.
Probably by now, Covid19 may join the rank of the other 4 human coronaviruses*. Yes, there are 4 other different coronaviruses living among us. Yes some of those are the ones that cause common flu and many deaths every years. And yes, many are immune to some of these viruses and there are flu vaccine for the viruses. Some are seasonal. But what will turn out for Covid19? Will it be seasonal too? We don't know yet. But what I speculate is that by now most of our lives would likely be back to normal, maybe with a new norm with some change of lifestyle evolve from all the lock downs and circuit breaker. Going to cinemas, having dinner outside, going for holiday, and many other activities could probably be a norm once again, and that include shopping for new launch properties at the show galleries.
I speculate this base on what happened in the past epidemics. Human behaviors don't really change much. Unless new and better incentives and pleasures can be found, we would likely want to go back to do the things we need and we like. Real estate should still remain as the basic need of humans and a pleasure and desire to own. It is one of the most sort after wealth accumulation and investment assets. We probably could see healthy transaction activities, and the price movement will once again be very much affected by market forces, Government policies, supply and demand.
Transaction volume spiked after crisis
Above are my personal opinion as a layman and a realtor, base on the past epidemics and crisis events. If you ask me, there may probably never be the perfect time to buy or to sell properties. Property ownership and investment is a long term affair. We should always look beyond the short term crisis. Maybe there could be the right time to buy or sell. And looking at what could happen in the next 8 to 10 years, I would say, now very probably is the time to buy. The time to sell will come, but I think likely not today.
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**all data and information extracted from URA and OrangeTee & Tie Research & Consultancy. The content and information provided is for general information only. It should not be treated as an invitation or recommendation to buy or sell any specific property or product. Each illustration in the presentation or article is based on current information as at the date of publication. Readers are to consider the content as one of the many factors in making investment decision and should seek specific investment advice. Readers should carry out their own due diligence or verification of such information. The author and publisher of the article are not liable for any losses. All right reserved.