The results are out: Singapore is a nation obsessed with property.
With more than 70 percent of Singaporeans owning their own home, and many more watching and speculating as to what the latest market trends will be like, the topic of property continues to fuel much discussion. And judging from the strong interest seen at recent condo launches across the island, it seems that this love affair does not show signs of abating any time soon.
But it's not just local developments that are a hit with buyers. Some are eyeing properties beyond our shores, either for residential or investment purposes. In fact, 1 out of 4 Singaporeans have showed consistent interest in purchasing a property overseas.
This stems from an underlying notion of real estate being a financial asset which in Singapore is considered to be the least volatile investment that has the potential to garner the highest returns over time.
After all, for the vast majority of Singaporeans, property is the largest purchase they will make in their lifetime. From a sociological point of view, purchasing and owning a place to call one’s own has strong associations with wealth and status so much so that it has been ingrained as part of our identity and even defines our sense of community.
It comes as no surprise then that when news headlines scream about fluctuations in property prices or a sudden introduction of new cooling measures, it would elicit a barrage of comments from property seekers regardless of whether they are in the market searching or not.
Based on this, PropertyGuru is pleased to announce the results of its Q3 Property Sentiment Survey, the quarterly benchmark for property affordability in Singapore.
Aimed at shedding light on the current mood and attitudes Singaporeans have towards the local property market, the survey takes into account overall satisfaction, future price perceptions and intention to purchase property as well as perceived effectiveness of government efforts, taken from over 800 online respondents.
PINPOINTING OUR GREATEST FEARS
There is no question that Singaporeans primarily look out for two things when finding out about property: affordability and prices. Both go hand in hand; with the latter rising at a much faster rate than median or average incomes in the last 2-3 years, so it raises the question about the ability of the common Singaporean having the necessary capital to finance homeownership.
On a positive note, the trend is expected to reverse in the coming months. According to the survey findings, there are a higher percentage of respondents in Q3 who are confident property prices across the board will not continue to rise in the next six months. As can be seen in the graph below, this is represented by a marked increase of at least 50 percent who opined that prices in the market will stabilise in contrast to public sentiment at the start of the year.
Expectations of no increase in price translate into an overall positive outlook for property affordability. As can be seen, although respondents in Q3 2013 still do feel that there is more that can be done to address the affordability issue (100 is the baseline for affordability), they are optimistic about the property market becoming progressively more affordable, a trend which has been established since the last quarter following a long period of dissatisfaction after Q2 2012.
A REACTION TO GOVERNMENT ACTION
With more Singaporeans viewing the property market as more affordable, does this suggest that the measures imposed by the government have also by extension been favourably accepted by the public?
According to the survey findings, this is not the case. While Singaporeans are generally in agreement with the government’s attempts at curbing further property price increases, the results show that more than 1 in 2 feel that the cooling measures introduced up to July 2013 had little impact in tackling property affordability issues.
This is felt most acutely among property upgraders, particularly those who currently stay in one- to five-room flats (47 percent) and HDB households earning less than S$10,000 a month (68 percent), who have the intention to purchase private property or a bigger HDB unit in the near future.
What explains this view? Although it can be said that the imposition of a higher Additional Buyer’s Stamp Duty (ABSD) on second or subsequent properties in January 2013 and the capping of the Total Debt Servicing Ratio (TDSR) at 60 percent in June 2013 resulted in a drop in the rate of price growth for resale HDBs and private homes as well as for new home sales, some feel that a longer period is required to establish a more conclusive picture on the overall impact.
On the other hand, others mention that despite government policies playing an influential role in the market, it only seeks to affect demand volume and not overall price. Simply put, while the rate of price growth and transaction sales have declined as a result of the cooling measures, properties today are still considered to be overpriced beyond what most are willing to pay, given that prices have grown almost two-fold over the course of the last few years.