PropertyGuru Group has revealed that Singaporeans are feeling less optimistic about the real estate market for the second half of this year in its biannual Consumer Sentiment Study.

The study’s overall Sentiment Index dipped by four points from 45 in H1 2020 to 41 in H2 2020, over a series of concerns raised around housing affordability, property prices, the overall real estate climate, and the perceived government efforts in the property market amid the current pandemic. Those dissatisfied with the current real estate landscape cite property prices not softening to levels they expect in the current situation, as a significant reason.

Across the four markets, which include Singapore, Thailand, Indonesia, and Malaysia, where the study was conducted, Singapore has seen the most drastic decline in a positive outlook on property prices in the next five years, with price perception dropping from 72 in H1 2020 to 56 in H2 2020.

Desire for more government stimulus amid a looming recession

Earlier this May, the Singapore government introduced several temporary property relief measures for individuals affected by the Covid-19 pandemic, such as a six-month extension for the remission of Additional Buyer’s Stamp Duty (ABSD) for a second residential property purchase.

However, 63 per cent of Singaporeans are still hoping for the government to further ease property curbs by lowering the cost of ABSD. This number is highest across middle-aged Singaporeans (70 per cent) and dominated by property investors or landlords. Conversely, the majority (68 per cent) of younger Singaporeans looking to buy or rent a home for own-stay purposes are more interested in seeing a further reduction in home loan interest rates, while 59 per cent say they would like a reduction in downpayment costs.

62 per cent of Singaporeans also want the government to reduce Buyer’s Stamp Duty (BSD), which is currently up to 4 per cent for residential properties.

Tan Tee Khoon, Country Manager of PropertyGuru Singapore, said, “The call for the government to ease property cooling measures like the lowering of ABSD, especially amongst property investors and landlords that this tax was chiefly targeted at, comes in the face of a looming economic recession and the estimated overhang of 30,000 unsold residential units. Besides, the macroprudential safeguard of the Total Debt Servicing Ratio (TDSR) will continue to rein in property seekers from overleveraging on borrowing even if ABSD is reduced or relaxed. On the flip side, younger Singaporeans would have just entered their peak home-buying years, so feedback would sway toward lower loan interest rates and downpayment costs to help curb one of their largest lifetime expense.”

Higher uncertainty over property prices present more room for compromise

When asked how the current Covid-19 situation has impacted their property-related decisions, more than half (55 per cent) of Singaporeans felt an increasing uncertainty over property prices in the current climate. This hesitation has led to sellers holding off property sales in hopes of receiving better offers, and buyers holding off on property purchases for lower prices. The study also found that about two in five (42 per cent) property buyers have become more price-sensitive and 82 per cent of property buyers were willing to compromise on home facilities in exchange for a more affordable home.

“It is no surprise that buyers are taking a more cautious approach towards property decisions given the heightened levels of market volatility brought by the pandemic,” said Tee Khoon. “That said, the eventual decline of Covid-19 cases in the community and subsequent resumption of the economy should see the release of pent-up demand for property buyers and sellers.”

Interestingly, two in five (40 per cent) property buyers still intend to make a home purchase for own-stay purposes within the next year, particularly 60 per cent of those renting and 76 per cent of those living with parents.

Top areas Singaporeans looking to purchase in are in District 15 (Katong, Joo Chiat, Amber Road, East Coast Road, Siglap), District 19 (Serangoon Gardens, Hougang, Punggol) and District 20 (Bishan, Ang Mo Kio, Thomson Road). Proximity to F&B outlets and malls (61 per cent), and ventilation and natural lighting (54 per cent) are also the top two features sought-after by Singaporeans following Covid-19.

Room to grow awareness of alternative home-financing options

Singaporeans are counting on property developers and banks to help stabilise the property market amid the global recession. While 79 per cent of Singaporeans indicate that developers should lower property prices, and 62 per cent think that developers should focus on affordable housing projects, 51 per cent expect more attractive home loan refinancing packages from banks.

78 per cent of Singaporeans surveyed indicated a clear preference for bank loans while 22 per cent indicated that they prefer HDB loans, when looking for a new home. This preference was distinct among older (89 per cent), high-income earners (91 per cent). Younger (43 per cent), lower (27 per cent) to mid-income earners (44 per cent), on the other hand, are more likely to opt for the latter form of repayment. Similar differences were observed for home loan refinancing, with 71 per cent and 78 per cent of older, high-income earners, respectively, indicating more familiarity with the refinancing process. Collectively, these findings reveal ample room to grow awareness about alternative home-financing options in Singapore, especially amongst younger homeowners—once they can afford to.

It is noteworthy that a third of Singaporeans (34 per cent) who favoured bank loans considered the dizzying array of loan options a barrier to application, followed by the long processing time (22 per cent), and the lack of easy status checks (20 per cent).

Keeping an eye out for overseas property investments

The study pointed out that Singaporeans’ appetite for overseas property investment remains steady, with nearly 40 per cent planning to purchase property overseas within the next few years. Of the respondents surveyed, Australia, Malaysia and Thailand were indicated as the most popular overseas locations among Singaporean property investors, chosen by 23 per cent, 18 per cent, and 10 per cent survey participants, respectively. Singaporeans chose ‘affordability of properties overseas’ and ‘for retirement’ as the top reasons for purchasing a property overseas.