84% of Singaporeans Find Property Prices Too High

SINGAPORE – PropertyGuru Group, Asia’s leading property technology company, today released its biannual Consumer Sentiment Study for H1 2021. The study found mixed sentiment among Singaporeans towards the property market. While there is an overall optimism, more than half of Singaporeans are still uncertain of future property prices and concerns over housing affordability have been raised.

The study’s overall Sentiment Index – which measures current real estate satisfaction and overall climate, housing affordability, interest rates, perceived government efforts, and property prices – rose by 2 points from 41 in H2 2020 to 43 in H1 2021. This uptick was driven by Singaporeans’ positive perception of interest rates and outlook on property prices. 56% of Singaporeans feel confident to purchase a property in the current climate.

At the same time, 56% of Singaporeans remain uncertain about future property prices and 34% are concerned about the delay in completion dates – higher among Millennials (aged 22-39) at 42%. Signs of buyer concerns over housing affordability are reflected in the study’s Property Affordability Rating, a score that measures consumers’ perception of property prices in Singapore and their ability to afford a property in the current prices and income. The rating dipped 5 points from 69 in H2 2020 to 64 in H1 2021.

Buyers feeling the pinch as property prices continue to rise

As property prices in Singapore continue to show an upward trend despite the pandemic, 84% of Singaporeans find property prices high, and fewer Singaporeans consider themselves able to afford a property with the current prices and income, down from 66% in H2 2020 to 60% in H1 2021.

Despite the various property relief measures introduced by the government, including extended support to reduce home loan payments, more Singaporeans feel that the government needs to do more to make housing affordable, up from 62% in H2 2020 to 65% in H1 2021. The rise in property prices over the last two quarters in 2020 fueled by pent-up demand post-circuit breaker could have prompted Singaporeans to call for further ease in buyer’s stamp duty (BSD) and lowered upfront downpayment costs. 64% of Singaporeans are hoping for the government to lower BSD while 49% are requesting a reduction in the upfront downpayment cost for a home.

It is also worth noting that the majority of requests to lower BSD and upfront downpayment costs come from Millennials, at 66% (vs. middle-aged and older Singaporeans at 62%) and 54% (vs. middle-aged and older Singaporeans at 45%), respectively.

3 in 5 Millennials are prioritising saving for home buying over lifestyle amid pandemic

While 72% of Millennials are thinking of moving out of their family homes in the next year, 28% are hesitant – citing the lack of savings to own or rent a home (48%) and not being married (35%) as top barriers for being unable to do so.

Despite this, most Millennials are establishing proactive financial steps to help fulfill their homeownership dreams. The study found that 69% of Millennials are prioritising saving for home buying this year over experiences like travel, food, hobbies, and staycations.

Dr. Tan Tee Khoon, Country Manager of PropertyGuru Singapore, said, “The economic and job uncertainty amid the pandemic has brought to the fore the importance of establishing long-term saving goals amongst Millennials, such as owning their first home. Millennials in Singapore are proving to become a dominant force in the property market as they look to fulfil their homeownership dreams in the next few years.”

Findings from the study further showed that the majority (97%) of Millennials would prefer to buy a home rather than rent, citing resale HDB flats as their preferred property type (30%), followed by new private non-landed homes (29%) and private non-landed resale homes (23%). Surprisingly, co-living is an unpopular housing option to them, with only 18% interested in the concept.

“As the need for remote work continues, the idea of co-living may seem less appealing among Millennials as this could mean competing more frequently for the use of common spaces, or even resorting to working within the confines of the bedroom,” said Tee Khoon. “Owning an HDB flat, on the other hand, offers Millennials a place they can call their own, granting them more personal space and flexibility. They are also likely to be more prudent in their housing decisions, thinking long-term with plans like selling the flat after the MOP to upgrade to private property.”

Tee Khoon added, “Still, co-living remains a great option for the budget-conscious Millennials who may not be ready to purchase a property but still want their own spaces or right-size their housing needs. Co-living tenants stand to enjoy enormous savings by sharing common living spaces with a like-minded community.”

Landlords expect residential rentals to fall in 2021

In the study, more than half (52%) of investors and landlords anticipate rental prices to decrease in the next 12 months but expect stability or a slight increase in the long term, while 63% expect rent to stabilise or increase in the next two years. 93% of landlords consider retaining tenants in the current climate more important than renting at the right prices. In doing so, almost 3 in 4 landlords (72%) have given or are willing to give rebates or discounts to help their tenants. “The rental market is one segment adversely affected by the pandemic with a significant reduction in demand due to the uncertain economy and weak employment outlook,” said Tee Khoon. “But the current rental market situation is temporal, so interest will likely pick up as Singapore begins making travel bubble arrangements across regions.”

More education needed around home loan financing to help bridge knowledge gaps

The study also identified the need for greater awareness and education around home loan financing, with 50% of Singaporeans indicating that their unfamiliarity with the required paperwork poses a challenge in them securing a home loan. Other concerns include their inability to afford their downpayment (39%) and job and income stability (36%). Meanwhile, nearly 2 in 5 Singaporeans (39%) are unaware that they can refinance their home loans. This number is higher amongst Millennials (47%) compared to middle-aged and older Singaporeans (33%).