Arcadia Consulting

Singapore Residential Market through SARS, H1N1 and COVID 19


The COVID-19 outbreak is of seismic proportion. And is fast evolving into an economic pandemic.

The virus took away the freedom of movement from millions of people, infected close to 3 million and claimed the lives of over 200,000 globally to-date. The virus has just about also infected every part of the organs, limbs and joints of global economies, financial markets and businesses around the world. Dow Jones Index tumbled almost 25% in Q1, bringing along with it stock markets everywhere. The Straits Times Index mirrored with a 23% fall during the same period. Oil prices have collapsed, and a little over two weeks ago the West Texas Intermediate crude contract for May 2020 delivery fell 321% and settled at negative US$40 per barrel (WTI is one of the three grades of crude oil used as a benchmark in oil pricing). More than 26 million Americans filed for unemployment in a little over the past five weeks, far exceeding the 22.4 million jobs that the U.S. took over ten years to create since November 2009, after the GFC recession.

The virus has created a gigantic black hole in the global economy. No one knows how big or deep it is. Everyday the world gets locked down, the bigger/deeper it gets. Governments from across the globe have poured unprecedented fiscal and monetary assistance into this economic black hole. Interest rates have been revised to almost zero. The monetary assistance countries poured in to save their economies and jobs amount to over 10% of their respective GDP, and more to be made available should the need arise. Singapore is no exception. With every passing day the pandemic causes grim and panic, every economist has predicted a great depression to follow once the virus is eradicated or when a vaccine is found. On 21st March, Goldman Sachs spooked the market with a -24% GDP loss for Q2 prediction, the result of a “sudden stop for the U.S. economy”. The MAS has revised Singapore’s 2020 GDP growth, for the fourth time, to between -4% and -1%.

From the turn of the millennium, the world has witnessed four pandemics: Severe Acute Respiratory Syndrome (SARS) between 2002 and 2004, H1N1 Swine Flu (H1N1) between 2009 and 2010, Ebola Virus Disease (EVD) outbreak from 2014 to 2016, and Coronavirus Disease 2019 (COVID-19) from December 2019 and on-going. Of the four, SARS, H1N1 and COVID-19 has reached Singapore shores and along with them brought devastation, despair and damage to lives and businesses. When it rains, it pours. This metaphor best describes the compounded impact these pandemics bring when they strike preceding or during ongoing major global economic, financial catastrophes, and/or military confrontation. Dot-com bubble burst, 9/11 and the ensuing Afghanistan war, together with SARS created the Perfect Storm; H1N1 added to the woes of the Global Financial Crisis brought about by the subprime crisis; and COVID-19 strikes when the world is facing  great uncertainties and impact of BREXIT and U.S.-China’s tit-for-tat trade war.

I hope to share some findings on whether SARS and H1N1 has impacted the Singapore private residential market,  and the effect COVID-19 has one Quarter since its start. It is by no means comprehensive or seeking to be the authority to predict the outcome of our private residential market post-COVID. By overlaying the time periods these pandemics happen on existing data on the private housing market, economic indicators, money supply, interest rates, and the dollar exchange rates, I hope this presentation gives you, as it had me, a relative perspective of the health of the private housing market during and post SARS and H1N1. And hopefully, a little preparedness one could glean looking forward to the end of COVID-19, and the economic pain and uncertainties to come.

It seems that SARS and H1N1 pandemic by themselves did not bring down the private home prices. It was the economic and financial turbulence that preceded SARS, and that coincided with the H1N1 outbreak that caused the private homes market to retract. Just like SARS and H1N1 did, COVID-19 has sent the private home market into a pause mode with movement control. It is the economic pandemic that is expected to come that will have a negative impact on the private home market. 

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