Singaporeans are defying the current economic downturn by expressing strong home buying sentiment even amid rising prices, as revealed by the PropertyGuru Consumer Sentiment Study H2 2021.
The study’s overall Sentiment Index – which measures current real estate satisfaction and overall climate, housing affordability, interest rates, perceived government efforts, and property prices –increased to 48 points in H2 2021, up by 5 points from 43 in H1 2021.
This uptick is driven by Singaporeans’ positive outlook on future property prices, a fair perception of home loan interest rates, and a rise in the Property Affordability Rating, a score that measures consumers’ perception of property prices in Singapore today and their ability to afford a property in their current prices and income.
Here are the key findings of the study:
Key Finding #1: Buying Sentiment Remains Strong Despite Rising Home Prices
While 90% of Singaporeans find property prices high, more consider themselves able to afford a property in their current prices and income, up from 60% in H1 2021 to 65% in H2 2021. In fact, 74% of Singaporeans still intend to purchase a home in the future despite rising home prices. Among these, 53% intend to buy a home within the next two years.
Nearly half (46%) of Singaporeans are satisfied with the array of good financing options available amid the low interest rate environment. 51% of Singaporeans believe this is the best time to get the most bang for their property buck in the long term, with 83% expecting property prices to increase over the next five years. It is also noteworthy that 1 in 3 Singaporeans (33%) eyeing HDB resale flats are willing to pay Cash Over Valuation (COV) for their preferred property. This willingness is greater amongst older (40%), higher-income earners (40%).
Key Finding #2: Singaporeans Are Keen to Make Smart and Sustainable Living Choices
82% of Singaporeans are willing to consider paying more for an environmentally sustainable home, with their top three sustainability features comprising smart cooling systems (65%), high-insulation windows and doors (60%), and solar panels (54%). It follows that Singaporeans welcome the Government’s new HDB Green Towns Programme, a 10-year plan to make HDB towns greener and more sustainable, with 2 in 5 (46%) willing to pay more to live in one. 81% of Singaporeans also voiced the need to preserve forested areas from urban development.
Dr. Tan Tee Khoon, Country Manager of PropertyGuru Singapore, said, “It is encouraging to see Singaporeans across generations embrace more eco-conscious home buying behaviour to advance sustainability efforts and combat climate change. As a leading proptech company in Singapore, we want to empower consumers and their growing desire for a sustainable future through tools like the PropertyGuru Green Score, which enables them to identify eco-friendly homes easily by assigning a sustainability rating to properties listed on our portal. The collective shift towards greener practices will simultaneously pave the way for more government initiatives and solutions around responsible urban planning that will positively impact the environment and help protect our planet.”
Key Finding #3: Millennials Are Poised to Reshape the Housing Market
71% of Millennials in Singapore are prioritising saving for home buying this year over experiences like travel, food, hobbies, and staycations, up by 2% from H1 2021 (69%). Millennials also aspire to move up the property ladder, with 69% of Millennial HDB homeowners intending to upgrade to private property after selling their HDB flat. Of which, 68% are looking to purchase a non-landed private property.
1 in 3 Millennials (32%) also seek to purchase a luxury property in the long run, with the majority citing this purchase as a dependable long-term investment (66%). Other reasons include its convenience (42%), privacy (38%), social status (30%), and facilities (29%).
“There is no doubt that Millennials in Singapore are one of today’s fastest-growing segment of home buyers, with savings accumulated from pandemic sheltering. The delay in homebuying can also be due to Millennials’ increasing preference for a larger, luxury property that commands higher prices than typical starter homes. While investing in property for capital growth is appealing, Millennials should exercise prudence and take the time to properly right-size their home ownership expectations based on their housing needs and financial situation as there is still considerable uncertainty in the economy,” said Dr. Tan.
Key Finding #4: Spoilt for Choice, Singaporeans Opt for More “Conservative” Home Loans
More Singaporeans are opting for HDB loans (33%) when looking for a new home, an 11% increase from H2 2020. This preferential gap widens amongst Millennials, with 2 in 5 opting for HDB loans (41%) over bank loans (59%). However, bank loans are still the general preference for the majority of Singaporeans, amongst 59% of Millennials, 76% of Generation X, and 72% of Baby Boomers.
The top reasons for those who prefer HDB loans include feeling more secure in the event of a late repayment (31%), considering themselves less financially savvy to refinance their loans (29%), and believing that they would get a better deal from taking an HDB loan compared to a bank loan (24%).
This decision to finance their home with an HDB loan compared to a bank loan could also be due to the overwhelming number of loan options to choose from. When looking for a new bank loan, 50% of Singaporeans spend most of their time comparing bank loans. 20% of these homeowners also spend time searching for more information about bank loans to make an informed choice.
Paul Wee, Managing Director of FinTech, PropertyGuru Group, said, “The abundance of loan options available can be daunting for most homeowners. It complicates the decision-making process, pushing them into a kind of decision paralysis where they stick to the most straightforward and safest option, like an HDB loan or a loan package with the lowest interest rate. This may not necessarily be the best option for everyone as one can easily overlook other important factors to consider such as one’s preferred loan tenure and current financial situation. There is no harm in seeking a second opinion, especially given the myriad of free online mortgage platforms or independent home loan experts and tools to help homeowners simplify this process.”
Findings from previous Consumer Sentiment Studies:
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