View of high-end apartments in Robertson Quay. (Photo: Christopher Chitty)
More Singaporeans are satisfied with the current real estate climate, even though 67 percent anticipate condo prices to increase in the next five years.
By Alexis Poon
The latest PropertyGuru Consumer Sentiment Survey gives one much to cheer about. Buyers’ sentiment is the highest since 2013, indicating that the Singapore residential market may be finally out of the woods. In the latest survey conducted in H2 2017, 37 percent of respondents indicated that they are satisfied with the real estate climate in Singapore, up from 34 percent in the previous survey done in H1 2017.
The higher satisfaction level is largely due to anticipation of long-term capital appreciation (45 percent) and the prevailing low mortgage rates (30 percent). Additionally, 28 percent of respondents indicated that Singapore has a stable and resilient real estate market.
It is notable that satisfaction levels have gone up, but there are more respondents who are unsatisfied with the market (42 percent) than satisfied (37 percent) or neutral (21 percent).
Prices still perceived to be high and expected to climb higher
The dissatisfaction of respondents’ stem from the perception that residential property prices is still high, with 37 percent citing high prices as the top deterrent for not purchasing a property. In addition, a record-high 46 percent of respondents think that prices will increase further.
Among the different residential types, condominiums have the most respondents (67 percent) expecting a price increase in the next six months, up from 57 percent in the previous survey.
More respondents expect condominium prices to increase in the next five years. 72 percent of them indicated that condominium prices will increase and 26 percent of respondents expect prices to increase by more than 10 percent.
Bright spot in the HDB market
Our survey indicates that price perception of HDB flats have improved significantly. 52 percent of respondents in the latest survey are satisfied with HDB prices, up from 47 percent in the previous survey.
39 percent of respondents in the latest survey think that HDB prices will increase in the next six months, down from 54 percent in the previous survey. Additionally, fewer respondents think that HDB prices will increase by more than 10 percent in the next six months; only two percent of them in the current survey compared to 10 percent in the earlier survey.
While most respondents are certain that residential prices will increase, they are less certain about the magnitude of increase. However, the majority expect HDB prices to increase by less than five percent and private residential properties to increase by a higher 5.0 to 10 percent.
Mixed view for rents
While price increases are on the cards, the picture for the rental market is less clear. Across the different residential types, equal percentages of respondents expect rents to increase and decrease in the next six months. The still high vacancy rate coupled with the rise of disruptors such as Airbnb could have contributed to the uncertainty in the short-term rental market.
However, the picture is more optimistic for the long-term rental market with more than half (51 percent) of respondents indicating that rentals will increase in the next five years, much higher than those expecting rentals to decline (21 percent).
Strong intention to buy
About half of the respondents intend to buy a residential property in the next six months. The purchase intent for condominiums has increased most strongly compared to other property types. This could be driven by replacement demand from homeowners who successfully sold their homes via en bloc sales. In addition, the returning optimism in the residential market may have convinced some buyers to take the plunge before prices rise further.
Districts 15 (East Cost and Marine Parade) and 11 (Newton and Novena) proved to be the most popular, with 44 percent of respondents planning to purchase a property in these two districts. In addition, 71 percent of them have at a budget of at least $750,000.
Among those who intend to buy a property, proximity to their workplace and amenities such as malls, parks and schools are key deciding factors. Home buyers also cited size of bedrooms as well as orientation and age of the unit as their main considerations when choosing a unit.
Government generally doing a good job
Despite the anticipated price increase, 35 percent of respondents think that the Singapore government is doing enough to make housing affordable, up from 32 percent in the previous survey. On top of that, 50 percent of them agree with the government’s stance on maintaining the existing cooling measures.
But more can be done
However, some respondents think that the government can do more to improve the real estate climate by regulating prices of newly launched projects (50 percent) and giving more subsidies for first-time owners (41 percent).
Foreign ownership of Singapore properties was a hot button topic, with almost half indicating that the government should impose stricter ownership restrictions (46 percent) or a minimum price threshold (44 percent).
Cooling measures targeting financing were under the fire, with the majority thinking that these measures should be relaxed. About one-third of the respondents think that the maximum loan tenure and Mortgage Servicing Ratio (MSR) should be reduced. 59 percent of the respondents think that the cap limit for the Total Debt Servicing Ratio (TDSR) should be relaxed.
In March 2017, the government relaxed its stance on the Sellers Stamp Duty (SSD) and respondents think that the government should now turn its attention to the other side of the coin. 80% think that the Additional Buyers Stamp Duty (ABSD) should be relaxed for Singaporeans who buy more than one property and Permanent Residents who buy one or more properties.
Less keen to invest overseas
21 percent of respondents indicated that they own overseas properties. Malaysia, India, the UK and Australia were the most popular investment destinations. More affordable prices, the investment destination being their home country and good capital appreciation were cited as the top three reasons.
The intention to purchase overseas properties has declined sharply to the lowest point since Q3 2011. Investors could be turning their attention to Singapore properties as the real estate sentiment improves.
For those who still intend to buy overseas properties, Australia, Malaysia and Thailand are the top three destinations. It is interesting to note that Australia and Malaysia are also among the top countries that investors already own properties in.
The top three reasons cited by those planning to invest in overseas properties are more affordable prices, good capital appreciation and higher rental yield.
Get the Guru View
- Buyer sentiment towards the Singapore residential property market has improved greatly, especially for the HDB market.
- The intention to buy over the next six months is strong, with the majority of respondents planning to buy a condominium in District 15 or 11.
- The majority of respondents also think that the government has done enough to keep housing affordable, but they think that some of the cooling measures can be relaxed.
|This article was first published in the print version PropertyGuru News & Views. Download PDFs of full print issues or read more stories now!|