Singaporeans feel less optimistic on the real estate market in H2

More than half of Singaporeans call for ease of property curbs.

Singaporeans are feeling less optimistic about the real estate market for the second half of this year as the overall sentiment index dipped by four points to 41 in H2 from 45 in H1, according to PropertyGuru Group’s biannual Consumer Sentiment Study.

This is attributable to a series of concerns raised around housing affordability, property prices, the overall real estate climate, and the perceived government efforts in the property market amidst the current pandemic.

The city-state also saw the most drastic decline in a positive outlook on property prices in the next five years, with price perception dropping from 72 in H1 to 56 in H2.

More than half or 63% of Singaporeans are still hoping for the government to further ease property curbs by lowering the cost of ABSD. This number is highest across middle-aged Singaporeans with 70% and dominated by property investors or landlords.

Conversely, 68% of younger Singaporeans looking to buy or rent a home for own-stay purposes are more interested in seeing a further reduction in home loan interest rates, whilst 59% say they would like a reduction in downpayment costs.

Further, 62% of Singaporeans want the government to reduce Buyer's Stamp Duty (BSD), which is currently up to 4% for residential properties.

PropertyGuru Singapore’s country manager Tan Tee Khoon said that the call for the government to ease property cooling measures comes in the face of a looming economic recession and the estimated overhang of 30,000 unsold residential units.

This is in addition to the macroprudential safeguard of the Total Debt Servicing Ratio (TDSR) which will continue to rein in property seekers from overleveraging on borrowing even if ABSD is reduced or relaxed.

“On the flip side, younger Singaporeans would have just entered their peak home-buying years, so feedback would sway toward lower loan interest rates and downpayment costs to help curb one of their largest lifetime expenses,” he added.

Furthermore, 55% of Singaporeans felt an increasing uncertainty over property prices in the current climate. This hesitation has led to sellers holding off property sales in hopes of receiving better offers, and buyers holding off on property purchases for lower prices.

The study also found that 42% of property buyers have become more price-sensitive, whilst 82% of property buyers were willing to compromise on home facilities in exchange for a more affordable home.

Interestingly, two in five (40%) property buyers still intend to make a home purchase for own-stay purposes within the next year, particularly 60% of those renting and 76% of those living with parents.

Top areas where Singaporeans are looking to purchase are in District 15, District 19, and District 20. Proximity to food and beverage (F&B) outlets and malls (61%), and ventilation and natural lighting (54%) are also the top two features sought by locals.

Locals are also counting on property developers and banks to help stabilise the property market amidst a global recession. Whilst 79% of Singaporeans indicate that developers should lower property prices, 62% think that developers should focus on affordable housing projects and 51% expect more attractive home loan refinancing packages from banks.

Moreover, 78% of Singaporeans surveyed indicated a clear preference for bank loans, whilst 22% indicated that they prefer HDB loans, when looking for a new home. This preference was distinct amongst older (89%), high-income earners (91%). Younger (43%) and lower (27%) to mid-income earners (44%), on the other hand, are more likely to opt for the latter form of repayment.

Similar differences were observed for home loan refinancing, with 71% and 78% of older, high-income earners, respectively, indicating more familiarity with the refinancing process.

It is also noteworthy that 34% of Singaporeans who favoured bank loans considered the dizzying array of loan options a barrier to application, followed by the long processing time (22%), and the lack of easy status checks (20%).

The study also pointed out that Singaporeans’ appetite for overseas property investment remains steady, with nearly 40% planning to purchase property overseas within the next few years. Australia, Malaysia, and Thailand were indicated as the most popular overseas locations amongst Singaporean property investors, chosen by 23%, 18%, and 10% of survey participants, respectively. They also chose ‘affordability of properties overseas’ and ‘for retirement’ as the top reasons for purchasing a property overseas.