COVID-19 Crisis 危机 - Spotting "Good" property picks (2020)


COVID-19 CRISIS OPPORTUNITY 危机 - SPOTTING "GOOD" PROPERTY PICKS (2020)
COVID-19 CRISIS OPPORTUNITY 危机 - SPOTTING "GOOD" PROPERTY PICKS (2020)


CORRELATION BETWEEN SINGAPORE PROPERTY MARKET AND ITS ECONOMY

The Singapore property market has weathered through 5 crises and is currently undergoing a pandemic :


  1. Asian Financial Crisis

  2. 9/11

  3. SARS

  4. Global Financial Crisis

  5. H1N1

  6. COVID-19

How does the Singapore property market behave during a crisis?


In Diagram 1, Singapore's GDP growth chart is represented by the green and red vertical bars. Whereas, the URA price index of private residential properties is represented by the orange trend line. Both charts span over the last 30 years.

Diagram 1 : Singapore GDP vs URA Price Index (Pte Property)
Diagram 1 : Singapore GDP vs URA Price Index (Pte Property)

Let's look at the right bottom corner where it indicated "Q1 2020". This corresponds to the COVID-19 pandemic we are undergoing right now. The GDP chart shows a red vertical line, indicating that we might go into a recession.


A recession is a significant decline in the economy as shown by a fall in the GDP over 2 consecutive quarters. - Investopedia

From the previous 5 crises, the GDP was negative (red vertical bars). The URA Price Index (orange trend line) also dipped. Will history repeat itself during this COVID-19 crisis?


Here's an interesting observation. When Singapore goes into a recession (red vertical bars), it will always bounce back to positive growth after three quarters.


So far, we can see the Singapore Government pumping a lot of money into the economy with the Resilience Package. This is an unprecedented amount of money to cushion the economy from the impact of the pandemic.



BUYING BEHAVIOUR DURING A CRISIS

In Diagram 2, the GDP is represented by green and red vertical lines. Whereas, the sales volume is represented by the blue trend line.