The PropertyGuru Singapore Consumer Sentiment Study (CSS) H1 2024 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 remained stable at 44 points, a slight increase from the last wave in the H2 2023 report at 43 points.
While satisfaction with the real estate climate and the perception of the government having done enough to make housing affordable have improved, expectations of future price increases in the property market have declined. The Property Affordability Rating shows an upward trend, from 43 points in H1 2023 to 44 points in H2 2023, and 46 points in H1 2024.
Key Finding #1: Majority of Singaporeans welcome National Day Rally 2023 property policy changes
The HDB policy changes announced during the National Day Rally 2023 were a welcome introduction for many Singaporeans. Two in five (40%) Singaporeans agree that the National Day Rally 2023 HDB policies will make HDB flats more affordable and accessible for all Singaporeans.
This positive sentiment resonates more across the high-income group (50%), for Singaporean households earning more than $10,000 monthly, and Singaporeans between the 22 to 29 (50%), and 30 to 39 (57%) age group.
60% of respondents agree that subsidies for Plus and Prime resale flats will make properties near MRT stations and the city centre more affordable, while 58% agree that the 10-year Minimum Occupation Period (MOP) for Plus and Prime flats will help to keep their HDB resale flats in attractive locations affordable.
While some quarters may think that the appeal of some Prime Location Housing units is diminished due to the tighter conditions, the data shows that it remains inconclusive, shares Dr Lee Nai Jia, Head of Real Estate Intelligence, Data and Software Solutions, PropertyGuru Group.
“For instance, in the December 2023 BTO exercise, the application rate for a 3-room unit at Alexandra Peaks was 0.3 for first-timer applicants and 8.2 for second-timer applicants. In comparison, the application rate for a 3-room unit at Woodlands Beacon and Urban Rise @ Woodlands was 0.9 and 9.1 for first-timer applicants and second-timer applicants.
However, if we were to look at the application rates for Tanglin Halt Courtyard, the application rates for a 4-room unit for first-timer applicants are 3.4 and 73.8 for second-timer applicants, much higher than the application rates for Woodgrove Edge in Woodlands,” he continues.
“There are many factors driving the application rates including micro-geographical conditions. One must dig deeper into the market conditions at a local level, and the mobility trends,” shares Dr Lee Nai Jia.
In addition, Singaporean singles are divided on whether the policy changes are sufficient in making housing more accessible for them, with 37% agreeing and 35% disagreeing with the effectiveness.
Key Finding #2: Renters are lowering their budget for rent due to higher cost of living
Despite the projected deceleration in the Singapore rental market, the majority of renters (85%) agree that the current rental prices are too high.
69% of Singaporeans expect rental prices to increase in the next six months, with 47% expecting rents to rise by 5% or more. This sentiment resonates higher among the low-income group, with 53% in the low-income group (below $5,000 household monthly salary) predicting that rental prices will increase by 5% or more.
At the same time, more renters have resorted to cutting down on their spending to afford the increasing rental prices, from 34% in H1 2023 to 37% in H2 2023.
To cope with a higher cost of living, more are reducing their budget for rent, with 52% of low-income home seekers sharing that they are willing to only allocate $500 to $1,000 for rent. The rising rental prices are forcing more Singaporeans to look for cheaper rental properties, a 6% increase from 38% in H1 2023 to 44% in H1 2024.
With local demand easing as more properties are completed, Dr Tan Tee Khoon, Country Manager – Singapore, PropertyGuru commented that “renters may see some reprieve in rent moderation given more completed units available for lease, especially toward the end of the year, providing tenants with more housing options.”
“Additionally, the introduction of the Provisional Parenthood Housing Scheme (PPHS) (Open Market) voucher is welcoming news for families in need of urgent housing. With the increase in supply of HDB rental listings, this will broaden the available options for families on a tight rental budget,” says Dr Lee Nai Jia.
Key Finding #3: Demand for residential properties remains resilient
Seven in 10 Singaporeans intend to buy a property, with more than half planning to buy it within the next five years. More 30 to 39 year olds intend to buy in the next one to two years.
This demonstrates the resilience of demand for residential properties in the next five years, albeit property seekers may take a longer time in their purchase decision, considering looming headwinds in the economy, employment market and the uncertainty of which way interest rates will go, says Dr Tan Tee Khoon.
He continues, “Real estate has always been sought after as a hedge against inflation. In the long term, real estate tends to appreciate, outpacing inflation and resulting in capital gains. The quantum of capital gains attained would likely outstrip other forms of investment. Even during economic downturns, real estate may retain their value and continue to appreciate as the economy recovers.”
Overall, the property sentiment index has remained stable from the last wave.
While satisfaction with the real estate climate and the perception of the government having done enough to make housing affordable have improved, expectations of future price increases in the property market have declined.
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