The majority of home buyers in Singapore feel prices are too expensive, but remain seriously interested in buying condominium units this year, according to findings published by PropertyGuru on Wednesday.
Based on its latest consumer sentiment survey which polled 940 people in Q4 2014, three out of five Singaporeans think local properties are overpriced. Despite this, more than 70 percent of respondents still want to purchase a condo, with 43 percent expressing their desire to own a unit in the next six months, with the key decision factors being affordability and amenities.
The release of these key findings coincided with the launch of PropertyGuru’s property outlook report for 2015 at an industry forum.
The portal expects the housing market to cool further this year with the possibility of a slight upswing in the fourth quarter.
With the cooling measures, particularly the Total Debt Servicing Ratio (TDSR) continuing to place constraints on the market, buyers are opting for smaller homes that are more affordable and cater to their immediate housing needs.
“In the Outside Central Region (OCR) and Core Central Region (CCR), there has been a marked increase from 14 to 17 percent and from 53 to 57 percent for condos 800 square feet and less,” said the report.
It added that developers need to adjust the prices of their projects to make them affordable for the majority of purchasers. For instance, mid-sized mass market units sized between 800 sq ft and 1,100 sq ft should be in the price range of $900,000 and $1.1 million.
PropertyGuru also looked at the effect MRT stations have on surrounding property values and found that suburban properties located near an MRT were more likely to achieve a price premium compared to condos in the city centre that were close to a station. Homes within proximity of an MRT station enjoy an average premium of 10 to 15 percent.
Citing the Thomson-East Coast line as an example, the report expects homes near the new MRT line to record capital appreciation in the long-term.
Meanwhile, 2015 could see property prices correct further while transaction volume will drop, revealed PropertyGuru, adding that prices of private units may slide 5.0 to 8.0 percent this year, while resale flat prices could dip by 4.0 to 6.0 percent.
Specifically, there is an abundant supply of new non-landed private properties as well as Build-To-Order (BTO) flats coming into the market which will apply further downward pressure on prices of private condos and resale HDB flats.
“Prices are expected to decrease rather consistently through 2015. Buying activity for private non-landed properties may pick up in Q4, once buyers have determined that prices have sufficiently bottomed out,” the report said.
In a statement, PropertyGuru explained that it was able to predict the movement of the market by using proprietary data available through its website in the form of enquiries submitted by users to track actual sales transactions.
The results showed that for HDB resale flats, an enquiry is converted into a transaction between three to six months, whereas it takes three months for private non-landed property. This led to the conclusion that enquiry volume is a leading indicator of transaction volume.
To read the full report, please go to: www.PropertyGuru.com.sg
Romesh Navaratnarajah, Singapore Editor at PropertyGuru, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg
