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88 per cent of Singaporeans “dissatisfied” over current property market; 69 per cent of millennials do not have “a structured savings plan” to purchase their own homes: PropertyGuru survey

A significant majority of Singaporeans are worried about astronomical property prices in the Republic, with such prices being expected to increase over the next five years, according to findings listed in PropertyGuru's Property Market Outlook report for 2019.

88 per cent of Singaporeans are dissatisfied over the state of the property market, according to PropertyGuru’s latest Consumer Sentiment Survey.

The survey also found that respondents felt that property prices are expected to "increase significantly in the next five years," with approximately 27 per cent predicting that condo prices will grow by over 10 percent.

"Close to half of the respondents said the property cooling measures should be relaxed," added the report, "of which 80 percent called for the reduction of ABSD for their second and subsequent properties."

"Other policies they want to see relaxed include the caps on percentage of monthly income which can be used to service housing loans – namely the TDSR and MSR," PropertyGuru noted in the report.

Almost 70 per cent of Singaporean millennials do not have "a structured savings plan" to buy their own homes

The PropertyGuru survey also found that "69 percent of millennials – or those aged between 21 and 37 – currently live with their parents".

"The majority (or 66 percent) of these millennials are looking to buy a property, with the central, northeastern and eastern parts of Singapore being their preferred locations.

"However, 69 percent of millennials revealed that they do not have a structured savings plan to fund their housing purchase. Millennials with no intention to move out of their parents’ home pointed to the lack of adequate savings to buy a home as the main reason for staying with their parents.

"Other reasons cited include high property prices (33 percent) and not being married, which makes them unqualified for an HDB flat (44 percent)," noted the report.

Housing supply expected to increase next year with new property launches

The PropertyGuru report anticipates that the local property market will observe the launch of multiple residential property sites, following $10.5 billion worth of en bloc deals concluded in H1 2018, among which are the "Pearlbank Apartments in Outram, which was sold to CapitaLand for $728 million," and "Parkway Mansion in River Valley, which sold for $938 million to a GuocoLand-led consortium".

The latest PropertyGuru Property Index data for Q3 2018 also observed a "58.7 increase in supply" from Q2 this year.

"Several mega projects with more than 1,000 units were launched during this period, such as Affinity at Serangoon, Riverfront Residences in Hougang and JadeScape in the Marymount area," stated the PropertyGuru report.

PropertyGuru Property Index (Supply) from Q1 2015 to Q3 2018. Source: PropertyGuru Analytics

A total of more than 5,600 new and resale units (excluding executive condominiums) were sold in Q3 2018, down 20 percent from the 7,000 units sold in the previous quarter, due to a drop in the number of resale transactions during the period, added the report.

"Urban Redevelopment Authority (URA) data shows that resale transactions accounted for 46.3 percent of all sale transactions in Q3, compared with 65.4 percent in the previous quarter," noted the PropertyGuru report.

It added that "Many individual sellers may have chosen to delay putting their properties up for sale and assess current market conditions first following the recent round of property cooling measures in July 2018," and that "While the cooling measures will likely reduce home buying demand, developers are expected to continue launching new projects in 2018 given that several showflats continue to record healthy sales".

"For instance, JadeScape sold 300 of the initial 480 units released in Phase 1 at an average price of $1,700 psf when the project was launched in September," the report illustrated.

Singapore Property Index from Q1 2015 to Q3 2018, with an emphasis on Q3 2018. Source: PropertyGuru Analytics

Private condominium prices expected to continue on an upward trend

Private condos in centrally located areas such as Serangoon and Potong Pasir are also expected to rise due to "underlying demand", with "a rise of 1.4 percent quarter-on-quarter and a 9.4 percent year-on-year increase in asking prices" observed in relation to "private non-landed residential properties in Singapore".

However, the report noted that the rise has been taking place at a slower pace in comparison to that of Q2, as a result of the latest round of cooling measures by the Government such as increasing ABSD rates and tightening mortgage rates.

The latest URA data cited by the report shows "a 0.5 percent increase in private home prices, compared with the 3.4 percent increase in the previous quarter".

"The Core Central Region was the only area to record a price increase of 1.3 percent for non-landed properties in Q3, according to URA data.

"Elsewhere, prices in the Rest of Central Region and Outside Central Region fell by 1.3 percent and 0.1 percent respectively," said the PropertyGuru report.

The PropertyGuru Price Index noted that "city fringe" districts, namely Districts 12 (Balestier, Moulmein, Novena, Toa Payoh), 13 (Potong Pasir and Macpherson) and 14 (Eunos, Geylang, Kembangan, and Paya Lebar) reported "the highest quarter-on-quarter increase in prices by 12.6 percent".

The high increase, according to the report, "could be attributed to the launch of several mid-market condos such as Park Colonial next to Woodleigh MRT station and The Tre Ver in Potong Pasir".

The PropertyGuru report also highlighted a continuously "strong demand" for properties in District 15 (Katong, Marine Parade, Siglap, and Tanjong Rhu), which in turn contributes to prices "rising faster than other areas in Singapore".

"The developing District 19 (Punggol, Sengkang and Serangoon) is also expected to see keen interest from buyers with several new projects launching there in recent months, including The Garden Residences, Affinity at Serangoon and the top-selling Riverfront Residences," the report stated.

Private property rentals on the rise, albeit slowly

Private property rentals have "improved slightly" due to an "improved vacancy" rate of 6.8 percent, a slight decrease from 7.1 percent in the previous quarter, according to the PropertyGuru report.

Citing data from URA, the report highlighted that "rentals rose by 0.3 percent following a 1.0 percent increase in the previous quarter" in Q3 this year.

"Rental prices of non-landed properties in the Rest of Central Region (RCR) rose the most by 1.5 percent, compared with the 0.4 percent increase in the quarter before, followed by the Outside Central Region (OCR), which saw rentals increase by 0.9 percent, compared with the 0.8 percent hike in the previous quarter," the report stated.

However, the report stressed that "rentals of non-landed properties in the Core Central Region (CCR) decreased by 0.9 percent, compared with the 0.8 percent increase previously".

It added that "more than 10,000 condo units are expected to be completed in 2019," which would signal a greater array of housing options for tenants.

"Properties that are close to places of work, public transportation, shopping malls and international schools will continue to be attractive to tenants," said the report.

However, the PropertyGuru report warns that "a strict cap" on the influx of foreign workers imposed by the government "will negatively impact rental demand".