Singapore Consumer Sentiment Study H2 2023

Singapore Consumer Sentiment Study H2 2023
Singapore Consumer Sentiment Study H2 2023

The PropertyGuru Singapore Consumer Sentiment Study (CSS) H2 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 – remained unchanged from the previous study at 43 points. Rating scores across the different parameters such as perception of interest rates for home loans and the current real estate climate have remained at similar levels to the previous H1 2023 study.

While there have been minor improvements to the affordability rating and current real estate climate score, over half (51%) of non-property owners in Singapore are still finding it difficult to secure their first home, with the sentiment highest among singles (55%), followed by married couples with kids (49%).

Key Finding #1: More Singaporeans plan to buy a home in the near-term but still struggle to buy their first property

Most Singaporeans (64%) intend to purchase a property. Of which, more are planning to buy in the next two years – an increase from 38% in H1 2023 to 45% in H2 2023. New Build-to-Order (BTO) flats (i.e., HDB flats purchased directly from HDB) continue to be the top property choice (31%) among Singaporean buyers, followed by resale HDB flats (25%), and newly launched non-landed private properties (15%).

Dr Tan Tee Khoon, Country Manager – Singapore, PropertyGuru, shares that this uptick could be due to the government’s ramping up of supply. Additionally, an estimated 100,000 private homes and HDB BTO flats are expected to be completed between 2023 to 2025.

“The projected number of private housing units (including Executive Condominiums (ECs)) in the Government Land Sales (GLS) Confirmed List for H2 2023 was ramped up by 26% to 5,160 units, as compared to the 4,090 units in H1 2023. Of the eight Confirmed sites announced, four could yield between 500 to 595 units each, while another three could deliver between 775 to 955 units each. Only one site was a modest 270-unit plot. These GLS sites are expected to debut for sale within the next 15 to 18 months, giving more choice to property seekers planning to purchase within the next two years.”

However, the accumulation of factors such as inflation, high cost of living and property prices are hindering Singaporeans from reaching their property aspirations. 51% of property seekers in Singapore rate it difficult to secure their first home, with more than half (55%) of singles, followed by married couples with kids (49%) sharing that sentiment.

Dr Tan Tee Khoon adds, “The latest HDB housing policy changes by the government to improve housing accessibility for singles, as well as announcements during the Budget 2023 speech and increased supply, should be a welcome step by Singaporeans faced with these challenges.

From the second half of 2024, singles can apply for 2-room Flexi units across all BTO projects under the new Standard, Plus and Prime classification. As BTO flats remain the top property choice for Singaporeans, this move will enable more singles to secure their first home in choice locations.”

Key Finding #2: Rising mortgage interest rates and continued inflation dampen Singaporean home ownership plans

Inflation continues to hamper Singaporeans’ property buying plans, and this trend is expected to persist if inflation continues. More than half (53%) across the board will delay their property purchase until inflation eases – a sentiment that has persisted from the previous study (55% in H1 2023).

Similarly, both property seekers and sellers face similar situations in the current high mortgage interest rate environment. Among non-property owners looking to buy property, more than half (59%) indicate they would delay their property purchase should there be further increases in mortgage interest rates. The sentiment is greater amongst non-property owners who are single at 67%.

58% of property seekers who own a property would hold off from buying a new property if mortgage interest rates were to increase. Meanwhile, one in three (34%) would pause selling their property if mortgage interest rates do not trend downwards.

But according to Paul Wee, Vice President – PropertyGuru Finance, there are signs that the narrative is shifting from asking ‘Will mortgage rates continue to rise?’ to ‘When are mortgage rates expected to fall?’. This comes as interest rates have begun moving sideways in the second half of 2023, and the US core inflation rate declined from 6.5% in March 2022 to 4.3% in August 2023, suggesting the likelihood of lower interest rates.

“In the last year, mortgage interest rates rose quickly from the near 1% levels during the COVID-19 pandemic. When interest rates were climbing rapidly, homebuyers chose longer-term fixed-rate loans. However, fixed rate packages with 1-year or 2-year lock-in periods, as well as floating rate packages may be better pre sently, to prioritise flexibility to capitalise on interest rate changes.”

Paul Wee adds, “For property sellers who are concerned that high interest rate costs could affect their ability to acquire new properties, they need to remember that mortgages are not a ‘one-off’ event. Instead, mortgages typically last some 25 to 30 years, depending on the property type. Ironically, buying their next property at the current interest rate levels may help them avoid the rising property prices which typically come with a lower interest rate environment.”

Key Finding #3: Singaporean investors are coming to grips with rising property taxes and going ahead with property purchasing plans

Despite a new round of cooling measures that introduced higher Additional Buyer’s Stamp Duty (ABSD) rates in April 2023, Singaporeans who will delay their property purchase due to the tax adjustments have declined from 29% in H1 2023 to 24% in H2 2023. Furthermore, the pool of property seekers who will continue their purchasing plans regardless of inflation has grown from 21% in H1 2023 to 25% in H2 2023.

The percentage of private homeowners who do not intend to sell but buy another property has also remained largely unchanged – from 25% in H2 2023 and 26% in H1 2023. Among those who identify as investors, this sentiment has grown in the last six months, with 47% intending to purchase another property without selling their current private property, up from 36% in H1 2023.

These findings could mean that investors are coming to terms with inflation and the heightened property taxes, possibly factoring in the ABSD hikes as part of the cost of acquiring properties.

Dr Tan Tee Khoon adds, “Among the investor class, there is an understanding that property taxes are part of the ancillary costs in residential property ownership and rising inflation is temporary.”

“ABSD for multiple residential property owners is viewed as a one-time transaction cost which property seekers would have to weigh against the larger scheme of property ownership, rental income, and capital appreciation. Alternatively, they could consider commercial property investments which do not attract ABSD or Seller’s Stamp Duty (SSD).

Findings from Previous Consumer Sentiment Studies:

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