top of page
  • Writer's pictureVivian Chong

Impact of Crisis on Real Estate Market

Updated: Jan 15

Real Estate Market

The COVID-19 pandemic is an unprecedented crisis.

It has literally sent the world to a stop. Many countries are under lockdown to curb the spread of an outbreak, bringing the global economic activity to a halt.

We are living through the worst recession since the Great Depression. Economists predict the recession forecast for Singapore to worsened between -4 and -7%.

We know for sure this will affect Singapore's property market. But to what extend?

The big question on the mind of every investor is: How deep is the impact and when is the right time to enter the market?

Let us dissect the numbers for the past financial crisis to see if we can find a clue.

Asian Financial Crisis (1997 to 1999)

South Korea

The Asian financial crisis (AFC) started in Thailand with the collapse of the Thai baht in July 1997.

Singapore, given her close economic links with Asian countries, could not avoid the effects of the crisis.

From a healthy 8 percent growth rate registered in 1997, Singapore’s growth fell to a dismal 1.5 percent in 1998.

Transaction volume

Property Transacted Volume during Asian Financial Crisis

Core Central Region (CCR) +43% Rest of Core Region (RCR) +14% Outside Central Region (OCR) +56%

Transacted Price

Property Transacted Price during Asian Financial Crisis

Core Central Region (CCR) -39% Rest of Core Region (RCR) -42% Outside Central Region (OCR) -26%

Transaction volume came back within 9 months of the crisis. Properties in both CCR and OCR see a big rebound in the number of units transacted.

Prices corrected during this period, and the biggest fall was seen in CCR and RCR.

Global Financial Crisis (2007 to 2009)

Global Financial

The Global Financial Crisis (AFC) is a worldwide economic crisis. It began in 2007 with a depreciation in the subprime mortgage market in the United States.

Subsequently, it developed into an international banking crisis with the collapse of Lehman Brothers on September 15, 2008.

Massive bail-outs of financial institutions, as well as other monetary and fiscal policies, were employed to prevent a collapse of the world financial system.

Singapore could not escape the financial crisis despite an average growth rate of nearly 8 percent from 2004 to 2007.

Transaction Volume

Property Transacted Volume during Global Financial Crisis

Core Central Region (CCR) -66% Rest of Core Region (RCR) -47% Outside Central Region (OCR) -13%

Transacted Price

Property Transacted Price during Global Financial Crisis

Core Central Region (CCR) -47% Rest of Core Region (RCR) -20% Outside Central Region (OCR) -14%

Transacted volume and prices were more impacted during GFC as compared to AFC.

As per during AFC, properties in CCR were the most affected.

So what can we conclude from the financial crisis?

Properties in OCR are the most resilience during the financial crisis, correcting averagely around 20%

This is largely because properties in OCR are mainly owner-occupied. High owner-occupancy rates mean there is less possibility of big market swings during a crisis.

Properties in CCR corrected the most, at an average of 43%. Properties in CCR are popular with foreigners, and many of them are bought for investment purposes.

With these in mind, how much correction will we see in this COVID-19 crisis?

Property Prices Trend since Year 2003

Property Prices Trend

From the graph above, we can see that the rebound in property prices after a crisis is always more than the correction which took place during the crisis.

Recovery took place after SARS in 2003. It increased by a whopping 112% before starting to come down in 2007 due to the Global Financial Crisis,

Prices move up by 82% after the GFC, before it corrects again due to the government's cooling measures. And it moved upwards by 40% before COVID-19 hits our shores.

Again, the golden question is: How much correction will we see in this crisis and when is a good time to enter the market?

Fundamentals of Singapore Property Market

After dissecting the numbers on transaction volume and prices during the financial crisis, let us look at the fundamentals of the Singapore property market.

Buoyant Property Market Before Global Financial Crisis in 2008

Prior to the GFC, Singapore's property market was in a buoyant state, fuelled by excitement over the 2 upcoming casino-led integrated resorts.

Foreign funds poured in, developers rushed to buy land, collective sales created millionaires. This caused property prices to soar by 49% between 2005 and 2007.

However, there was no control over foreign-fund induced asset inflation. Local buyers were priced out of the market. There was also little deterrence against speculation. It was not difficult to borrow.

When GFC struck, many were caught.

Fundamentals of Singapore Property Market in 2020

Singapore government came out with nine rounds of cooling measures post GFC between 2009 to 2018. It has dampened speculation and price increase was more sustainable.

On top of that, the government came up with a whopping $60m billion economic stimulus package. This will help companies to sustain their business and keep their workers.

Also, the government has extended measures like getting banks to defer home loan payments till the end of the year. This will help to reduce fire sales, bank foreclosures, and bankruptcies.

Lastly, there is always room for the government to ease or unwind earlier cooling measures if the property market remains muted.

Scenarios That Could Unfold

Best case: V-shaped recovery

In the best-case scenario, where COVID-19 comes under control within the next few months, property buyers will resume their property search. Business activities could also pick up.

A sustained recovery in residential sales volume and prices could possibly gather pace from 2H2020, when economic outlook becomes brighter.

Consumer confidence could return swiftly, and a rebound in the aviation, tourism, and retail sectors could follow.

V-shaped recovery

Worst case: U-shaped recovery

In the worst-case scenario, COVID-19 could linger persistently.

Businesses will be hit by an extended slowdown in activities. Private residential sales performance may face stronger headwinds arising from muted economic outlook.

Market confidence could gradually restore after 4Q2020. Foreign funds and property investors will likely be back in search of good properties in safe haven like Singapore. Low-interest rates and pent-up demand from local buyers will also give the property market a boost.

Cloud boost


A fair correction in prices is expected. However, we do not think it will be to the magnitude of the GFC, where prices plunged 24.9%.

The Singapore government, banks, developers, and the housing market as a whole, are in much better shape and better prepared to cope with the crisis than before. This makes it unlikely for a sharp fall in property prices.

Back to the golden question: When is a good time to enter the market?

My take is it is not so much about the timing to enter the market. Rather, it is about finding the right property with intrinsic value at a discount. If you can find that, anytime is a good time!

I hope this article gives you a good insight into the past financial crisis and a direction to where our property prices might be headed.

Remember this:

The next peak in price is always higher than the previous one.

If you would like to have a chat on real estate matters, make an appointment with me for a non-obligated discussion!


About The Author

Vivian Chong

Vivian is a highly experienced real estate agent who has been in the industry for 18 years.

Over the years, she has transacted numerous property deals including HDB and private properties. She is well-versed in policies and regulations involving the sale and purchase of residential properties. She has also handled many transactions involving complicated situations like contra, divorce, administration/probate cases, and decoupling / part-share purchase.

Vivian is also a mother to 2 boys. Being a real estate mom allows her to spend more time with her children as they were growing up. Both boys are avid footballers representing their schools and clubs. She loves watching their games and hardly misses a game whenever they play.

Vivian is an active real estate salesperson and team leader. Call her at 98577714 for your real estate matters, or if you are looking to join the real estate industry.



bottom of page