The PropertyGuru Singapore Consumer Sentiment Study (CSS) H1 2023 revealed that the overall Sentiment Index – which measures current real estate satisfaction and overall climate, housing affordability, interest rates, perceived government efforts, and property prices in Singapore – has dipped slightly by 2 points, from 45 points in the H2 2022 report to 43 points in H1 2023 report.
This slight decrease is driven by a lower affordability rating, despite an improvement measured in the overall satisfaction and current real estate climate score. As compared to the sentiment in H2 2022, the affordability rating declined from 58 to 43 points; an increased number of Singaporeans (37%) also feel that they are now somewhat unable or definitely unable to buy a property in H2 2022, compared to 25% in H1 2022.
Key Finding #1: More Singaporeans re-evaluating property purchasing plans
As inflation woes remain unabated and property prices continue to climb, 55% of Singaporeans are considering delaying their property purchase until prices stabilise. Meanwhile, 24% of Singaporeans voiced they would drop all plans to buy entirely.
Among those looking to buy a property in the current climate, more (31%) are now considering an HDB BTO flat – an increase from 16% in H1 2022. This sentiment is highest among younger Singaporeans aged 22 to 29 (47%) and lower-income individuals (50%), in terms of age group and salary, respectively. 67% of Singaporeaans who intend to purchase an HDB BTO flat are drawn to the affordability of these properties.
Despite growing affordability concerns, some Singaporeans are accepting of the hefty resale HDB flat price tags. 3 in 10 (29%) find it reasonable for these properties to be sold at $1 million or more. This sentiment is higher among those aged 30 to 39 years old and those in the high-income group.
Dr Tan Tee Khoon, Country Manager – Singapore, PropertyGuru, shares, “Given the increase in marginal Buyer’s Stamp Duty (BSD) announced in Budget 2023, we expect property seekers searching for private residential homes between the $1.5 million to $2 million price range to pause and recalibrate their purchase preferences.”
“They may even further ‘right size’ their accommodation choices or consider HDB resale flats, especially if they are first-time applicants due to the enhanced Central Provident Fund (CPF) Housing Grants available. They would now have more financial muscle towards purchasing the larger flat types such as four- or five-room flats.”
Key Finding #2: Despite property cooling measures impacting more homebuyers, Singaporeans still feel more can be done
Almost half of Singaporeans (48%) have indicated that they have felt the impact of the latest round of property cooling measures and are now looking for a less expensive property – a 9% increase from 39% in H1 2022. The impact of cooling measures is more strongly felt by property investors – 93% in H2 2022 from 57% in H1 2022. Of homebuyers affected by cooling measures, the majority (55%) cited the higher interest rate floor as the top reason.
67% of Singaporeans expect more cooling measures to be introduced soon, with 20% expecting it to happen within H1 2023 and 47% within the year.
With property prices in Singapore hitting record highs and still on an upward trajectory, just 1 in 3 Singaporeans (33%) agreed that the latest cooling measures have successfully promoted a stable and sustainable property market – with this sentiment more keenly felt among high-income individuals (38%).
Measures such as the increased Additional Buyer’s Stamp Duty (ABSD) rates and 15-month wait-out period for private property downgraders are also targeted toward the wealthier demographic. Most of those who agreed (56%) shared that the cooling measures have slowed the increase in property prices and value.
Dr Lee Nai Jia, Head of Real Estate Intelligence, Data and Software Solutions, PropertyGuru Group shares that prices for private residential homes are expected to stabilise. However, the labour market remains tight and asking prices are unlikely to ease.
“The higher stamp duties and property taxes are targeted at the higher-end properties. But these new measures are unlikely to nudge the prices of high-end homes downwards because the demand for such homes tends to be price inelastic. Instead, the number of listings for high-end properties may drop as the sellers may prefer to wait out until the activity picks up again.”
Key Finding #3: Preference for housing loan types more distinguished in the current high interest rate environment
The preference for housing loan types is more distinguished now, with more HDB buyers and owners (68%) opting to pick up an HDB loan in the current high interest rate environment. This marks an 18% increase from 50% in H1 2022.
HDB loans continue to be popular among young adults aged 22 to 29 (77%) and low-income individuals (80%). 51% of HDB owners who had financed their home with an HDB loan also intend to stick with their existing housing loan type – a 17% increase from 31% in H1 2022.
Paul Wee, Vice President – PropertyGuru Finance, says, “HDB loans are priced at 0.1% above the CPF Ordinary Account (OA) rate, which makes it 2.6% – substantially below the effective rates of the loans from financial institutions. For those eligible to take on an HDB loan, it is natural for them to start their home financing journey with one. These borrowers can easily refinance later and move from an HDB loan to a bank loan.”
However, property investors and landlords who own an HDB property still lean towards a bank loan – 64% and 59%, respectively. 61% of HDB owners planning to refinance with a bank loan state an opportunity to save more money – this is higher than 38% in H1 2022.
“As interest rates have risen over time, it makes sense for homeowners to regularly review their home loan for opportunities to save. They can also look at their loan tenure, assess the need for additional funds, or restructure their loan property ownership to optimise how they manage their loans,” advises Paul.
Findings from Previous Consumer Sentiment Studies:
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