PropertyGuru Group, Asia’s leading online property group, today revealed that consumers are less optimistic about the real estate market and feel that more should be done to make housing affordable. PropertyGuru Group’s biannual Consumer Sentiment Survey conducted in H1 2018, showed that the Sentiment Index (a score calculated based on six parameters including satisfaction, housing prices, and consumers’ future expectations of the market) remained at 39 points, similar to H2 2017’s score.
High property prices remain a key concern for Singaporeans. Out of those who expressed dissatisfaction about the state of Singapore’s property market, 88 percent cited it as the key reason they continue to feel unhappy about the property market. Over the next five years, consumers see private property prices increasing steeply, with 27 percent predicting that condominium prices will climb by more than 10 percent, while a quarter think that landed property will increase by the same. In contrast, only 13 percent of survey respondents think that HDB prices will increase by a tenth from today’s prices.
With recent moves by the city-state to raise Additional Buyer’s Stamp Duty (ABSD) and tighten loan-to-value (LTV) limits on residential purchases, it is likely that consumers will adopt a wait-and-see attitude rather than commit to a purchase.
Commenting on the foreseeable impact of these policies, Lewis Ng, PropertyGuru Chief Business Officer said, “While new cooling measures might moderate prices of property, we anticipate that buyers would take a wait-and-see approach to gauge where prices might go. With buyers now having to fork out more cash upfront, these recent moves have made it more expensive to consider property as an investment option. Sellers looking forward to a market recovery to sell their properties, might feel some frustration as well, especially en bloc hopefuls who did not manage to see their sales go through prior to the measures.”
Respondents think more can be done to make housing affordable but ABSD should be relaxed
Even before the government tweaked measures to slow the growth of property prices, only 27 percent of respondents felt that the government was doing enough to make housing affordable. 53 percent of respondents surveyed felt that the state should regulate the price of newly-launched properties by developers, while 49 percent thought that more restrictions on foreign ownership should be imposed.
Close to half of the respondents surveyed felt that cooling measures should be relaxed to make housing affordable. Of these, 80 percent wanted the ABSD imposed on Singaporeans for the purchase of second and subsequent properties to be reduced. Other policies that respondents indicated should be relaxed include the caps on the percentage of monthly income that can be used to service housing loans – Total Debt Servicing Ratio and Mortgage Servicing Ratio.
Millennials want to get on the property ladder, but lack sufficient savings
39 percent of millennials (those between 21 to 37 years of age) surveyed currently live with their parents. Of these, a majority (66 percent) are looking to purchase a home. The key regions millennials are looking at for their future home include the central, northeastern and eastern parts of Singapore. However, 69 percent of millennials stated that they do not have a structured savings plan to finance their housing purchase.
Millennials who do not intend to move out of their parental home also indicate the lack of sufficient savings for their own home purchase as the primary reason for their decision. Other reasons for choosing to remain in their parental home include not being married and hence being unqualified for a HDB flat (44 percent) and high property prices (33 percent).
“While monthly CPF contributions can be used for future home purchases, given property prices in Singapore, we recommend that younger Singaporeans also put aside a fixed percentage of their monthly paycheck to go towards their home purchase. At the same time, before committing to a home, they need to ensure that they have adequate savings to finance their loans for at least six months to a year in the event they suffer any loss of income,” Ng added.
Paul Ho, chief mortgage consultant at iCompareLoan said, “homeowners who are concerned about housing affordability should not spend more than 30-40 per cent of their gross monthly income on housing costs.”
He added: “This is so that individuals can afford basic necessities like food, healthcare, and transportation each month while being able to set aside some personal savings.”
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