Ravi Chandran
Younger Singaporeans, aged between 22 and 29, are most optimistic about future property prices says a new study by Propertyguru
– Younger Singaporeans are more optimistic about future property prices
– Singaporeans also felt that ABSD should be relaxed for citizens buying their second property
– Singaporeans are willing to pay more for an environmentally sustainable home
PropertyGuru Group on March 3rd revealed that Singaporeans are more positive about the property market in its bi-annual Consumer Sentiment Study.
The Sentiment Index has increased 5 points from 40 to 45, indicating a positive uptick in sentiment amongst Singaporeans on the local property market. The higher satisfaction level is largely due to perceived government efforts (39 percent) and current real estate climate (52 percent).
Satisfied With Government Policies
In September 2019, the government announced various measures to make public housing more affordable and accessible for Singaporeans, such as the raising of income ceilings to S$14,000 and the newly consolidated Enhanced CPF Housing Grant (EHG) targeted to help first-timer families buying BTO flats.
The study found that younger Singaporeans, aged between 22 and 29, are most optimistic about future property prices. 70 percent of Singaporeans are looking to buy a home in Singapore, most of which, have intentions to buy within the next two years.
Future MRT lines (89 percent) and government Master Plans (82 percent) are also cited as key considerations for property purchase.
Dr. Tan Tee Khoon, Country Manager – Singapore, PropertyGuru, said, “Amidst the current macroeconomic headwinds and ongoing COVID-19 situation, we do not expect property prices to significantly drop and we are confident that property prices will remain stable in 2020. Buyers, who are looking to purchase a property this year, should first and foremost consider their needs in their property search and be prudent in their buying decision – calculate their finances and have contingency plans to service mortgage loans in the event of unemployment or an emergency.”
Future Property Prices on Anniversary of One Year Post Cooling Measures
2019 was also the anniversary of the cooling measures the government had introduced which includes Additional Buyer’s Stamp Duty (ABSD) rates and tightening loan-to-value (LTV) limits on residential property purchases. While more than half of Singaporeans think that ABSD is successful at stabilising the property market, 60 percent of respondents also felt that it should be relaxed for citizens buying their second property. Singaporeans also want more leeway when it comes to borrowing for home loans. Just over a third of respondents felt that the ability to borrow 75 percent of a property’s value is too low. Given 72 percent of respondents believe that property prices will continue to increase over the next five years – one inference here, is that the desire for more home financing support will continue to be on the uptrend.
Singaporeans Top The Region# As Super Savers; Home Loan Process Is A Challenge
Singaporeans take the lead in Southeast Asia as super savers with 70 percent of respondents indicating that they will start saving before looking for a home to buy. This comes as no surprise, as buying a house is one of the biggest life decisions most Singaporeans will ever make. On the other hand, the younger Singaporeans, who are still in the early stages of their lives, are more likely to start saving only after estimating the cost of the home they intend to buy.
When it comes to home loans, only 18 percent of Singaporeans affirmed that they are very familiar with the process and almost half indicated ‘not being familiar with the paperwork’ as a key challenge they faced. A surprising 40 percent said they were not aware that they can re-finance their home loans. Singaporeans are also turning to online tools such as an Affordability Calculator for help with working out how much they can afford to buy when selecting a property, with more than half indicating that they have used a home loan calculator before.
Moving Towards A More Sustainable Future In Homes
Singaporeans are becoming increasingly aware of the impact of climate change, and more are open to eco-friendly features for the home. The study found that more than half of respondents are willing to pay more for an environmentally sustainable home. Both solar panels (73 percent) and a smart cooling system (68 percent) top the list of preferred types of sustainable features.
Tee Khoon said, “We are happy to see that sustainability is gaining popularity among home buyers, and to meet the rising demands, more property developers have also incorporated sustainable solutions into their residential projects. Together with new government initiatives such as the HDB Green Towns Programme, we are definitely moving one step closer to the goal of a sustainable future.”
Mr Paul Ho, chief mortgage officer at iCompareLoan said, “it is natural that the young feel more optimistic about future property prices. But those that are buying a home, especially if they need to get a mortgage for their purchase, may over-estimate their ability to afford a home. Such sub-optimal decision making may be very expensive as the prospective buyers could love their option fees.”
Mr Ho added, “it is always good for the prospective property buyers to seek the advise of professionals. Mortgage brokers especially have good connections with various banks and will be very familiar with the loan application process. It is best if the prospective buyers seek the services of such professionals. There is nothing stopping them from getting such advise because it is absolutely free to the buyer.”
