COVID-19 will no doubt leave a trail of destruction on the real estate landscape in Singapore. Activities in the real estate market have been curtailed by stricter border control, tighter safe distancing measures and particularly the implementation of the ‘circuit breaker’. The home rental market is unlikely to go unscathed as it is a derived demand. How then, will Covid-19 impact the home rental market?

Singapore’s Circuit Breaker

Before the outbreak, Singapore’s rental market was robust with an increasing influx of foreign professionals. Based on the latest data released by the Ministry of Manpower (MOM), a total of 189,000 Employment Passes were approved in 2019 - 3,200 more than in 2018.

However, according to Peter Koh, HJ Real estate, COVID-19 presents a very sombre threat to Singapore. Prioritising the prevention of disease spread and safeguarding public health, the Singapore government initiated a pseudo-lockdown, also known as the ‘circuit breaker’, which started on April 7. This was implemented despite the potential economic damage and repercussions from a shuttered economy.

Photo by Ong Wee Jin

Decline in rental volume

As the circuit breaker kicked in, the month-on-month percentage drop in rental volume was the highest since 2011. Flash data released by real estate portal SRX Property on May 13, estimated that the number of non-landed private homes leased decreased by 36.5 per cent, from 4,829 units in March to 3,068 units in April. April's rental volume was also 40.6 per cent lower than a year ago and 32.3 per cent below the five-year average.

SRX's estimations also showed rental decline of 0.9 per cent for private condos and apartments in April. Year on year, despite rising 1.8 per cent in April, private rent is down 15.7 per cent from its peak in January 2013.

Tables by Straits Time, Data by SRX

According to Ms Christine Sun, head of research and consultancy at Orange Tee & Tie’s, the rental volume decrease could be due to a few reasons. Travel restrictions enforced by many countries, including Singapore, have significantly affected and decreased the number of foreign expats who can enter Singapore for work. This is especially so for workers from neighbouring countries, like Malaysia, who remained in their home countries due to the coronavirus outbreak. As a result, the rental volume dropped.

In contrast to the plummeting sales in the midst of the circuit breaker, private homes rental was improving, rising 1.1 per cent in the first quarter of 2020. This was a pick up from the 1 per cent decrease in the previous quarter. By locations, rentals of non-landed homes in the outside central region (OCR) performed the best at an increase of 1.9 per cent, followed by core central region (CCR) increasing by 1.4 per cent and rest of central region (RCR) increasing by 0.6 per cent.

Future impact on Singapore’s rental market

Looking ahead, observers believe that the rental market will continue to face challenges as companies adopt more conservative hiring policies and prospective tenants are restricted from visiting and inspecting properties for lease during the circuit breaker period.

It is highly likely that the pandemic will have an enduring impact on the home rental market, even as the economy stirs into activity. The employment market is expected to shrink, causing some foreigners to lose their jobs and resulting in weaker leasing demand. This could ultimately lead to a 2 to 4 per cent year-on-year decline in the private residential and HDB rental index for the rest of 2020. Prior to the outbreak, housing rentals was expected to increase 1.5 to 3 per cent this year due to the tight labour market and lower supply of completed private homes.


With Singapore’s rental market heavily relying on foreign professionals, the Covid-19 pandemic has dealt a blow to the home rental market. In April, implementation of the circuit breaker restrictions had resulted in a 36.5 per cent and a 0.9 per cent drop in private home rental volume and prices respectively. Despite repeated fiscal boosts to the economy and monetary payouts to Singapore citizens, the economy is widely expected to suffer as the country, and the world, engage in a prolonged battle with a highly contagious virus. This, in turn, is expected to have a depressive effect on the private home rental market in Singapore.

As Australia is now more than a month into COVID-19 lockdown restrictions and Australians are settling into this new normal, it goes without saying that it has been a tumultuous month for the economy and the property markets.

Decrease in property prices

At the beginning of this month, settled property sales had been trending higher and most cities had executed a recovery from the preceding housing market downturn. The trends were generally positive across each of the capital cities, as mentioned by Michael Yardney, Director of Metropole Property Strategists.

However, as Australia enters their 6th week of lockdown along with the government’s shutdown of non-essential services, the temporary ban on auctions, open inspections and face to face meetings have made a negative impact on the property markets. We are starting to see a dip in housing markets due to a decrease in consumer confidence and weaker economic conditions, as the lockdown restrictions progress.

According to CoreLogic’s hedonic house price index, there has been a loss of momentum in housing value growth rates since mid-March, with data through to mid-April seeing a continuation of this trend. As the combined capital cities measure shifts into negative territory week-by-week for the first time since early August last year. The graph below expresses this change in values for the combined cities.

With the sharp incline in unemployment expected to hit 10 per cent, Shane Oliver, AMP Capital’s chief economist, believes this could mean an escalation of debt-servicing problems, forced sales and plummeting property prices of up to 20 per cent. This may result in properties being offered on the market at distressed prices.

Decrease in interest rates

The Reserve Bank Board (RBA) reduced the cash rate twice in March 2020, to 0.25 per cent, which aims to flood the market with cash to stave off a recession. With the cash rate sitting at a new record low, we expect costs of fixed-rate mortgage products to reduce significantly. To hopefully, boost the cash flow of businesses and the household sector as a whole and might be the perfect opportunity to invest for some.

Investor’s perspective

With the plummeting property prices expected to drop to as low as 20 per cent along with the cash rate at an all-time low of 0.25 per cent, this might be the perfect time to invest in property. If you are a genuine buyer, in a good financial position, with good job security; this might be the opportunity for you.

From an investment perspective, real estate is a defensive investment and are usually less volatile than other investments. Real estate provides long term returns as the price increases, in addition, the stable cash flow with the ability to tailor rent to manage occupancy serves as a source of income till the eventual sale.

Despite the great fluctuation of real estate prices over the years through the various downturns (as depicted in the chart above), Australia’s popularity has resulted in an increasing and continuous international immigration over the years. Klear Picture, an investment specialist firm predicts, that this trend is not expected to slowdown in the coming years. With significant continual demand, a shortage of residential properties in the country will continue to rise, which will translate to better rental yields and rising capital growth for investors. This displays the perfect opportunity for property investors looking for investments with positive growth potential and high return on investment.


The coronavirus outbreak will clearly impact the Australian housing market, as the lockdown progresses. This is largely due to the decrease in consumer confidence, weaker global economic conditions and lockdown restrictions. We expect this situation to lower the price expectations of current property owners who are unable to weather the coming market uncertainties hence presenting a good opportunity for investors to pick up such distressed properties. In addition, with the RBA cash rate going down, investors who lock in mortgage contracts during this period can expect lower cost of funding their property investments.

© 2019 by Fraxtor.