iProperty - Feb 05, 2013 - By: Getty Goh
iProperty.com, one of Asia’s top property portals, has been conducting the annual Consumer Sentiments Survey (CSS) since 2011.Through this one-of-a-kind survey, iProperty.com has been able to shed light on what consumers think of the real estate market.
To better understand how the Singapore property market has evolved over the past few years, iProperty.com has collaborated with Ascendant Assets Pte Ltd to analyse the 2013 survey results.
The latest figures will be compared against results from past surveys to draw meaningful conclusions.
Although 3 years may not be deemed as a statistically long time, some trends were observed to exist. Some of the trends also closely reflect actual market conditions.
By marrying the survey results with data from the Singapore property market, it is envisaged that the survey will eventually become a tool that consumers can use to navigate through the volatile real estate market.
Overview of respondents – who are they?
In general, the proportion of male to female respondents over the past 3 years has been fairly consistent with slightly more male than female respondents.
In terms of occupation, the make-up was also consistent with:
(1) Executive / Managerial positions;
(2) Professionals and
(3) Self-Employed forming the largest three groups for the past 3 years.
As forage, more than 94% surveyed were above 26 years old – which is considered to be of “home hunting” age.
Putting all these together, it can be concluded that findings from this survey is reflective of the views of consumers who are thinking of buying or selling a property (see Figure 1).
Finding 1: Changing consumer sentiments– more consumers are putting off their buying decision
Since 2011, it was observed that the percentage of respondents who did not intend to buy a property within the next 1 year was on the rise.
It is interesting to note that the results for 2013 saw a sizable increase from the year before (see Figure 2).
From Figure 3, it was observed that 2012 and 2011 were the third and fourth years that had the most residential property transactions.
Hence, the low percentage of respondents who did not intend to buy a property within the next 1 year corresponded with high transaction volume.
In view that 73% of the respondents are thinking of delaying their purchase in 2013, the survey results strongly suggests that the transaction volume would drop in the coming year.
Finding 2: Private condominiums are still highly sought after
Based on the survey, it is interesting to note that respondents have consistently favoured private condominiums (over landed properties).
This can be seen as the percentage of respondents who are interested in private condominiums has consistently been above 66% (see Figure 4).
This runs contrary to the general assumption that many Singaporeans aspire to own a landed property.
However a possible reason for this result could be because landed properties are generally pricier and many of the respondents find it out of their budget.
Source: iProperty.com and Ascendant Assets Pte Ltd (* the choices for 2013’s survey did not have homeownership. Hence long-term investment as well as better environment for families, are used as proxy answers)
It is also noteworthy that there is change in consumers’ motivation to enter the residential market.
To illustrate, in 2011, about 40% of respondents wanted to buy a property for rental income. This figure dropped to 37% in 2012 and 24% in 2013.
From this, it can be concluded that investors (who are looking for rental income) are increasingly put off by the numerous cooling measures and are looking at opportunities in other sectors.
Not surprisingly, when this is compared against actual transaction data, it was observed that the share of residential deals for the past 2 years has been on the decline (see Figure 5).
From 1995 to 2010, residential transactions formed more than 90% of all transactions. After the cooling measures were introduced in 2011 and 2012, the proportion dropped to 88.56% and 85.73% respectively.
Combining all these information, we can infer the following – most consumers are still interested in private condominiums.
However, due to the onerous investment conditions in the residential market, brought about by the numerous cooling measures, investors who were thinking of buying a residential unit for rental income has dropped.
Going forward, this reinforces the earlier point that the residential sector could see a drop in 2013.
With investors and property buyers leaving the residential sector in pursuit of higher yield in overseas markets and non-residential sectors, we would expect that only genuine home seekers would be left.
Hence, it does not come as a surprise that more respondents saw themselves as Property Owners in 2012 and 2013 (see Figure 6).
Finding 3: Trends for respondents' property budget
From the survey, it can be seen that the consumers with a budget of less than $600,000 formed a sizable portion of the respondents.
From Figure 7, it can be seen that this group made up 46% and 49% in 2011 and 2012 respectively (see Figure 7).
It does not come as a surprise as it is in line with Singapore’s median income.
Based on Singapore’s Department of Statistics, the median monthly household income per household member in 2011 was $1990 (source: www.singstat.gov.sg/pubn/papers/people/pp-s18.pdf).
Assuming a newly married couple both earn that amount and commit 40% of their combined salary to repaying the monthly property installment, their property budget would be around $560,000.
Based on the survey results, a likely reason behind the drop in respondents in that budget range for the 2013 survey to 33% could be because consumers with that budget are having a challenging time finding value-for-money properties that are priced at $600,000 or less and are currently keeping away from the real estate market due to the high property prices.
Finding 4: Interest in overseas properties
One would expect consumers’ interests in overseas property to pick up over the last few years as residential property prices in Singapore is at an all time high and the investment environment has become more challenging after numerous rounds of property cooling measures.
However from the consumer sentiment survey, the findings seem to suggest that interests for overseas properties has not increased over the years.
From Figure 8, it can be seen that in 2011 and 2012,the percentage of respondents who are thinking of investing overseas are 42% and 38% respectively. In the latest survey, this figured dropped to 36%.
A likely reason for this result could be that those who were thinking of buying an overseas property would have already purchased something.
Another reason for the drop in interest could be due to the lingering uncertain global economic outlook. Consumers who invest abroad typically are savvier investors who are more attuned to the global market situation.
Hence, their decision to invest overseas is not solely based on “micro” push factors (i.e. numerous cooling that has made the Singapore property market more challenging), it is also based on “macro” pull factors (i.e. how well the global economy would perform in the coming months).
As a result, in the latest survey, a significant proportion (45%) of respondents indicated that they would wait and only buy an overseas property after 2years. In comparison, the bulk of the respondents in 2011 and 2012 indicated that they would buy an overseas property within the next 1 to 2 years.
Despite the change in sentiments, it is noteworthy that the top two reasons for buying an overseas properties are
(1) to take advantage of the favourable exchange rate and
(2) migration plans.
It is also interesting that two of the most popular investment destinations for the last 3 years have consistently been:
(1) Malaysia and
For any property transactions to happen there must be willing buyers and sellers.
The iProperty’s 2013 CSS has shown that consumers have become more conservative and many are thinking of holding back their buying decisions.
In view that sentiments have cooled, it is questionable how much more property prices will rise.
For those who are inclined to sell their units soon, they may want to price their units more attractively so as to sell their properties before the property market malaise sets in.
For those who do not wish to sell, it would mean that they must be prepared to hold as the survey results suggest that 2013 is going to be a bumpy ride for the property market.
Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)