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COVID-19 pandemic came as bad news to property owners. As a result of the pandemic, property prices have been dropping drastically since January 2020. In the 1st quarter of 2020, prices of private properties in Singapore has decreased by 1.2%. According to property analysts, it is expected that prices will be corrected by 5% to 8% this year due to a weak demand and a poor outlook for the economy. Even though fire sales are not expected, due to the low unemployment rate, this pandemic has affected property owners in Singapore in one way or another.
Due to the virus, potential customers are not as willing to visit the property before the Circuit Breaker (CB) measures were enforced. During CB, it makes it even harder to close a deal as it is not the wisest choice to head out unnecessarily, thus decreasing the number of sales.
Buyers are also waiting for prices to drop as they are expecting a global recession to be coming very soon. With the reduction in economic activities, it will result in a more attractive price for buyers; thus, a huge number of them are waiting for the opportunity to purchase a property at a low price.
With the entry restrictions implemented, numerous people who rented flats or rooms in Singapore are stuck in their hometown. This would leave the flat unoccupied, thus incurring certain costs (read next point). Even though the flats are vacant, landlords are not allowed to terminate their rental contract or evict the renters out.
According to Manpower Minister Josephine Teo, Chinese nationals who are on a work pass in Singapore are unable to return due to the restrictions. A percentage of them are staying in rented HDB flats; this resulted in the lowered rental income of the landlords of these group of people.
The possibility of earning an income from the Chinese work pass holders is also decreasing as issuance of work passes to them has been temporarily suspended. This might cause a competitive rental market if the suspension is not lifted after a long period of time.
The lowered sales volume would cause you to be at a disadvantage as you are paying off the mortgage loan (if applicable) and the property is left vacant. Maintenance of the property also has to be dealt with to maintain the living conditions for future owners – and this is another cost to the property owner.
In order to lighten the financial burden of those who took on home loans, Monetary Authority of Singapore (MAS) has come up with a deferment scheme which allows individuals to defer their property loan (Deferment package) till 31 December 2020.
Despite the decrease in interest rates this year, it could lead to a quicker return of economic activities once the virus is contained and investors, and property buyers, are more optimistic of the economic outlook. Property owners in Singapore should have been prepared with risks of falling prices before investing in properties.
Contact Mortgage Consultancy now to get the smartest financial bank loan advice specifically for your home. We are able to provide more than 100 loan packages from 16 banks for you to compare and choose from! Feel free to contact us at +65 8556 5271 so that we will be able to help you make an informed decision, suited to your needs.