Are you looking to buy?

By Bernard Tong & Feily Sofian

/ The Edge Property |

July 20, 2015 9:00 AM SGT

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Half of Singaporeans looking to buy properties in the next 12 months: Survey

Despite the uncertainty in the direction of property prices, approximately half of Singaporeans surveyed are looking to buy a property within the next 12 months. This is one of the key findings from a survey commissioned by The Edge Property to gauge the general sentiment of the property market. Independent global research firm Research Panel Asia was appointed to survey 800 Singaporeans (above 25 years old) over a one month period.

Out of the 800 participants surveyed, 34% of them expect prices to continue falling while only 24% expect prices to rebound in the near future (see Chart 1). The remaining 42% are not sure where the prices are heading. For context, prices have fallen 9.6% since 2Q2013’s peak for the HDB resale market and 6.7% since 3Q2013 for the private condo segment.

Interestingly, despite the negativity and ambiguity on the market outlook, many Singaporeans are on the lookout to either buy or invest into a property. These results are consistent across the different age groups. The Edge Property has also recently written articles on finding undervalued deals and the potential recovery of the high-end residential market, which highlights the willingness and capacity for buyers to jump into deals which are priced correctly.

Ms. Phang Lah Hwa, Head, Group Consumer Secured Lending, OCBC Bank observes that recent property launches at moderate pricing have seen good take-up. “Published data indicates softening of property prices in some areas, and the general view of market analysts is that property prices will continue to ease further. This will fuel buying interest especially amongst home buyers who take a longer term view, and understand the costs as well as opportunities of investing in real estate,” she added.

Price and amenities topped the list

Price and proximity to amenities were the most important criteria when respondents look for a property (see Chart 2). There is still ample liquidity in the market, given that income has continued rising amid a tight labour market. As a result, buyers are on constant lookout for attractively priced projects. Recently launched High Park Residences, for example, drew keen interest from buyers who were enticed by the project’s average price, said to be below $1,000 psf. In times marked by mounting uncertainties and dented affordability, the general buyers tend to be more receptive to projects priced below $1,600 psf. Unit sizes were also kept compact to make the absolute price affordable. A typical two-bedder at North Park Residences, for example, started at 624 sq ft and a three-bedder from 829 sq ft.

Well-heeled buyers, meanwhile, are drawn to value deals which offer substantial discounts from their historical prices. Freehold Leedon Residence in District 10, for example, moved seven units in May at a median price of $1,890 psf. Across the road, 99-year leasehold D’Leedon found buyers for six more units at a median price of $1,502 psf. Last week we found that resale volume for high-end condos by Singaporeans and Permanent Residents has jumped 33% year-on-year in 1H2015 and a majority 42% of the transactions were below $2 million. Based on URA’s flash estimates, prices of non-landed high-end homes is now more than 7% off its last peak.

Buyers are also increasingly discerning. New launches that were priced a tad higher higher or not as well-located compared to rival projects have witnessed slower sales. A majority 61% of respondents would conduct their own research before consulting a professional and property websites were the most popular tool to obtain information (see Charts 3&4). The same number of respondents also found research articles and analytic tools extremely useful in their property search.

Proximity to amenities was the second most important criteria after prices. High Park Residences, for example, is a stone throw away from The Seletar Mall – a six-storey mall housing over 130 shops including BHG department store, Shaw Theatres and UNIQLO. Buyers also bit the $1,388 psf median price at North Park Residences, drawn its connectivity to Yishun MRT station and bus interchange with a 236,000 sq ft Northpoint shopping mall literally at its doorstep.

Amenities superseded tenure in property search criteria with only 17% of respondents felt freehold tenure was important. Based on URA data from 1995 to date, prices of 99-year leasehold non-landed homes tend to rise faster in an upmarket, possibly due to their locations. Freehold prices, on the other hand, were less volatile, whether in an up- or a downcycle. Buyers could also be counting on the properties’ en bloc potential as the physical building ages and were therefore, less concerned over the property value as the tenure dwindles.

Singaporeans are still not comfortable investing overseas

In recent years, there are increasing number of foreign developers marketing overseas properties in Singapore. Weekend roadshows from Malaysia and Australia developers have been quite common in recent years. Nonetheless, despite these marketing efforts, 73% of the Singaporeans surveyed would NOT consider investing in overseas property market (See Chart 5).

Lack of familiarity and ambiguity on foreign regulations are the possible reasons for this. Recently, the Consumers Association of Singapore (Case) called for the authorities to tighten legislation on marketing overseas projects here so buyers can make well-informed decisions. CEA, the governing body for the Estate Agents has also introduced general guidelines on buying overseas properties.

For the 27% who would considering investing overseas, Malaysia is still the top destination, followed by Australia. This is possibly due to the numerous marketing efforts and property talks conducted on both markets. However, with scarce research information on overseas markets, prospective buyers might miss out opportunities in less ventured territories. The Edge Property regularly features research reports by market experts on overseas market.

Chart 1: One third of respondents expect prices to continue falling